Relevant life policies, since their creation, have helped many different employees to look after their loved ones in the event of their death. There are many reasons why relevant life policies and companies’ life insurance policies can be so beneficial for employers, too. However, it is a relatively new scheme.
Many small businesses want to ensure that their employees are protected and feel cared for at their workplace. However, setting up a group scheme can be expensive. A relevant life policy is typically used by smaller businesses that can’t afford a group scheme but still want to offer perks to their employees.
In this article, we’ll answer the question ‘when did relevant life policies start?’ and discuss why employers should consider implementing this scheme for their employees.
When did relevant life policies start?
Relevant life plans were created in 2006, under the pension simplification legislation. They came into effect on the 6th of April 2006.
What are relevant life policies?
Put simply, a relevant life policy is a type of policy that a business can take out to provide life insurance for an individual employee. This provides employees with free life insurance. Meaning, if they pass away, their spouse, children or dependents will receive a lump sum of money to help them after their death.
Similar to a traditional life insurance policy, the individual employee will be assessed (based on their physical health) and the amount of cover will be determined. The employer will then pay this policy until the employee retires or they pass away while still employed by the company. The life insurance policy will then pay out to the dependents.
The relevant life policy can either be a set amount, known as level, or increase with inflation so the eventual pay-out will be relevant to the cost of living at the time.
Relevant life policies are tax-efficient.
There are a number of tax-related benefits of relevant life policies. Firstly, employees do not have to pay any income on their life policies as they are not considered a benefit in kind. These policies, in the event that there is a pay-out, are usually not subject to inheritance tax.
Businesses can also benefit by giving their employees relevant life insurance policies. Businesses can label these life insurance policies as an expense, which can reduce their corporation tax.
Why should businesses invest in a relevant life policy?
There are many reasons why businesses should reward their employees with relevant life policies aside from tax benefits. If you are considering offering your employees life insurance, here are some reasons why you should invest:
It gives your employees peace of mind: Death is an inevitability, but it is something that many people worry about. If they pass away, their family will be left without their income. They may struggle to make ends meet and to pay for the funeral. By providing your employees with life insurance, you will be ensuring that they have peace of mind. They will know that their loved ones will be supported even if the worst thing happens. And if they’re not worrying about financial issues, their productivity and performance may improve.
It can help you to find and retain talent. One of the most important things that any business needs to do is to ensure that they are able to find employees to fill job roles quickly. Also, that these employees love the job so much that they don’t want to leave. By offering life insurance, your company is more likely to attract new talent. All whilst ensuring that your current employees feel valued at work.
It can help to improve financial wellness: When asked what they worry about the most, most people would say money. Money can be a huge stress for many people, and this stress can impact how people work. By offering free life insurance policies, employees may feel more financially secure. In turn, this can help them to feel less stressed about their finances and can help them to stay focused.
It can protect their loved ones: If you want to do one thing that will help ensure that your employees feel valued at work and that they have a sense of loyalty for your business, ensuring that their loved ones will be protected in the event of their passing can ensure that workers stay loyal to your company. By ensuring that their loved ones will be financially secure after their passing, it can ensure that they feel valued and it can go a long way to enhance company culture.
Find the best relevant life policies today
If you’re thinking about offering your employees relevant life policies, check out and compare the best relevant life covers and relevant life plans at WIS Business Protection. If you want to know more about the answer to ‘when did relevant life policies start?’, we’re more than happy to help.