Relevant life insurance is an insurance policy that a business can use to provide individual employees with life insurance cover. As an alternative method of death-in-service benefit, relevant life insurance is often used instead of a group life scheme to ensure an employee’s family and loved ones are cared for financially following an employee’s death.

Recent statistics have shown that up to 8.6 million individuals in the UK don’t hold life insurance – making it a valuable and worthwhile addition to your company benefits. Relevant life insurance pays out on the individual’s death, offering essential financial protection after they are no longer able to provide financial support themselves.

As a viable option for many businesses, relevant life insurance is an attractive option to bring in stellar employees and retain existing staff. As an added benefit as part of your hiring portfolio, relevant life insurance isn’t just a great benefit for your employees. It can be a powerful tool to improve hiring, increase employee loyalty and prove your commitment to providing a positive and person-focused working environment.

There are plenty of options for relevant life insurance out there. Whether you’re a start-up looking to improve upon employee benefits or a large business looking to implement life insurance for the first time, WIS can help.

The most significant benefit of relevant life insurance policies are the tax savings. As the premiums are not treated as a P11D benefit, there are no Benefit-in-Kind implications. Both the employee and employer will not have to pay National Insurance Contributions for this life insurance policy. 

Plus, under current UK tax rules, a relevant life plan will not usually impact the employee’s Pensions Lifetime Allowance. And, in the event of a claim, the payout is typically free from income, inheritance, and capital gains tax. This is based on our understanding of current legislation and HMRC practice, which can change. 

To be eligible, an employee needs to be a UK resident. Being on PAYE as this is used to define an employee.

Certain types of businesses are not eligible for relevant life insurance. Equity partners or members of a Limited Liability Partnership along with Sole Traders are not eligible.

While some limitations may apply to life insurance, in the majority of cases, you will be able to offer relevant life insurance to the majority of your employees.

Critical illness and disability are not covered as part of relevant life insurance. Employees can also choose to have their own personal insurance policy in addition to a relevant life insurance policy through their employer.

For businesses, the primary benefit of establishing a relevant life insurance policy is how tax-efficient this process is compared to group life assurance. While larger companies may find group life schemes work out cheaper, smaller businesses will get more out of a relevant life insurance policy. Beyond financial benefits, relevant life insurance is also an excellent way to interest potential hires and retain good employees as part of an attractive benefits package.

For employees, the benefit of relevant life insurance is peace of mind and no personal premiums for financial protection. For high-earning staff, relevant life cover also benefits from not counting towards their lifetime pension allowance.

You are able to insure up to 25 times the employee’s remuneration. Remuneration includes salary, bonuses, benefits in kind as well as regular dividends from shares in the employer’s company or group of companies. 

The policy must end before the employee’s 75th birthday and must be bought before an employee’s 73rd birthday. 

When it comes to finding the best deals for relevant life insurance, WIS Business Protection is the team you want on side. Our expert service and whole of market reach allow us to pair you with a wide range of different insurance solutions, helping you to find the right choice for your specific circumstances.

Are you looking for advice or guidance? If you’re unsure whether relevant life insurance fits your business needs, speaking to our professional team is the place to start. We can advise on the best insurance and protection packages that suit your business, and our transparent approach means you know exactly where you stand with our service. Why not get a meeting pencilled in with the WIS team today?