Relevant Life Cover is a life insurance policy offered by the company your work for. It allows companies to offer a death-in-service benefit to its employees (including salaried directors). It’s set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the person insured.

It can help smaller businesses attract and retain high-calibre staff by offering them attractive benefits packages that are also tax efficient. It can also be a tax-efficient way for shareholder directors to take out life insurance.

Tax benefits

There can be tax benefits for both the employer and employee.

Employer benefits:

  • corporation tax relief (so long as the premiums are wholly and exclusively for the purposes of the business); and
  • no National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy.

Employee benefits:

  • no National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy;
  • the policy payments won’t be taxed as a benefit in kind; and
  • policy payments and benefits don’t count towards annual or lifetime pension allowances.

With great benefits, this policy offers peace of mind for both the employer and employee so it’s surprising that awareness of Relevant Life Plans (RLPs) has reduced by 24% in the last two years, with only 28% of businesses being aware of such policies in 2015, according to Legal & General.

The insurer’s research, which surveyed nearly 850 business owners across various industries, showed that awareness was higher two years previous, with 37% of owners in 2013 knowing about RLPs. The research also found that those businesses least likely to have heard of RLPs were not for profits, small businesses and those in the property/real estate and education sectors.

Richard Kateley, head of specialist protection at Legal & General, said: “Relevant Life Plans are policies which many employees would like to be offered by their company, if only they knew about them. However our research shows that few know they exist and therefore are unaware of the benefits they could offer. Our research actually shows that there has been a reduction in this awareness among business owners over the last few years.

All businesses should consider relevant life insurance for their staff and Directors, it is a great way to attract and keep good staff and is a tax efficient way of offering benefits for such important insurance protection.

For further information on relevant life insurance, please contact Stuart James Financial Solutions on 01423 561060 or email

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