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RELEVANT LIFE COVER – Competitive mortgages & protection insurance


Relevant life cover allows you to protect your dependents in a way that mirrors the death in service benefits that you may have had as a permanent employee.

Until recently, employer funded life insurance was only available to large businesses in the form of a ‘group life’ scheme for all employees. With a minimum number of insured persons and prohibitive cost this was not realistic as an option for Contractors. A recent development in the use of trusts means that smaller companies now have the chance to tax efficiently provide death in service benefits for their employees.

How does a Relevant Life Cover Policy work?

  • If you have a partner who receives an income from the company then you can tailor the policies to cover you both individually as long as they are an employee of the company, for example a company secretary.
  • The policy can cover you or any partner who earns salary or dividends for a sum of up to fifteen times your total remuneration from the company.
  • This life cover will pay out a lump sum in the event of your death up to age 75 and can offer you the peace of mind that your family, an individual or a charity of your choice will be looked after.

Why choose a Relevant Life Cover Policy?  

  • Contractors using a One Man Ltd company can transfer the cost of life insurance to your business rather than find the cost personally from your post-tax income. In this way the new plan offers you substantial savings on any existing life cover that you pay for personally.
  • It should also be possible to offset the premiums against corporation tax as a business expense
  • As you pay the premiums from your company, the overall cost to you can be significantly less when compared to paying mainstream policies from your personal bank account. Typically a ‘net’ £20pm premium would entail a higher rate tax payer having to find £30pm gross whereas the £20 cost can instead be met direct from company.
  • Unlike the old company sponsored ‘Key-man’ insurance policies, where any pay-out on death belonged to the company and your dependents were taxed on the receipt of funds, this new policy is kept in trust to protect your dependents.
  • An added bonus is that in most cases the benefits won’t be liable for inheritance tax as long as they are payable through a simple discretionary trust.
  • Even if you decide to return to permanent employment, you can still benefit from the tax savings by simply transferring your policy to your new employer. Your cover is written in trust and this not only keeps the money safe from any liabilities that the new company has but also makes the plan easier to transfer.
  • You can pay the policy personally and this means that, unlike traditional death in service cover that is non-transferrable by the employee, this policy can be kept in place irrespective of who you work for.
  • Irrespective of any health issues that arise, you will not be medically underwritten again with this cover and so the policy can remain intact, providing continuity to the protection that your dependents need using what can be a highly tax efficient arrangement

To find out more about the options available to you for relevant life cover call 01423 561060 or info@sj-fs.co.uk