What Is The Difference Between Keyman Insurance & Relevant Life Cover?

Get My Instant Quotes
5 mins

Both Keyman Insurance and Relevant Life Cover can provide Life Insurance to key people. They’re also both owned and paid for by a business. However, the two types of policy are distinct and very separate.

Key Person Cover is designed for business continuity purposes, so to help the business deal with the loss of a key person by compensating for lost profits, hiring a replacement etc.

Keyman Insurance can also be used to pay out a small sum to wind up the business in the event of a key individual’s death or to repay a corporate loan.

Relevant Life Insurance, on the other hand, is designed for the insured and their loved ones, paying out a tax-free cash lump sum to help financially at a very difficult time.

Keyman Insurance is for the benefit of the business, while Relevant Life Insurance is for the benefit of the employee and their family.

What is Keyman Insurance?

  • Key Person Cover protects a business against the risk of a key player in the company dying or developing a serious illness / injury.
  • There are two separate forms of protection with Key Man Cover: Life Cover and Critical Illness Insurance
  • Life Insurance protects against the death of a key individual (or them being diagnosed with less than 12 months to live under Terminal Illness Cover)
  • Critical Illness Cover pays out a lump into the business should the key person develop condition out of a set list of serious illnesses / injuries
  • The key person could be anyone within the business responsible for the generation of profits or who otherwise is crucially important to the ongoing success of the company
  • Key Man Insurance is typically taken out for two main reasons: business continuity purposes (to ensure the business can continue without the input of a key person) or at the stipulation of an investor or lender who wants to protect their interest in your business.
  • For business continuity purposes, the premiums are typically a tax deductible business expense providing they’re taken out on the life on a non-shareholding employee, as these premiums are wholly and exclusively for the benefit of the business. However, the benefit will be taxed on a claim.
  • If Keyman Insurance is to protect a loan, premiums are typically not tax deductible as the premium is for the direct benefit of the lender, but the benefit is usually received free from tax.

It’s important to discuss the tax implications of Key Man Insurance with your accountant to make sure you stay on the right side of HMRC’s Key Man rules.

What is Relevant Life Insurance?

  • Relevant Life Insurance is there to provide an incredibly tax-efficient Life Insurance for company directors
  • You can also use it to provide Life Insurance for key individuals within your firm beyond directors, especially where there aren’t enough people for a Group Life Insurance policy.
  • By running your life cover through your business, you can make savings on corporation tax, income tax and National Insurance payments compared to taking out a policy personally.
  • Check how much you could save with our Relevant Life Calculator
  • The payout will be set as a multiple of your remuneration, which encompasses salary and dividend payments
  • Your adviser will help you set up a Relevant Life Trust alongside your policy, a crucial component that ensures the benefit is paid to an employee’s loved ones free from taxes

You cannot include any element of illness protection within a Relevant Life policy, as this falls foul of HMRC’s tax rules in this area.

Key Person Insurance or Relevant Life Cover?

Keyman Insurance
Relevant Life Insurance

Ownership and Premiums

Owned and paid for by the business

Owned and paid for by the business

What Does It Protect?

Protects a company by ensuring cash for business continuity purposes should a key person pass away or become critically ill

Protects against the death of an individual by paying out a tax-free cash lump sum to the family of a deceased employee

Why Get Cover?

Key Person Cover is often taken out to ensure business continuity should a key individual dies or suffer a serious illness.

It can often be a stipulation from a lender or investor who wants to protect their stake in the company

Relevant Life Insurance is typically taken out by directors themselves (paid for by the business) for family protection purposes.

It can also be used by micro firms to provide a level of personal life insurance to their employees where they do not have enough members to set-up a Death In Service scheme.


When used for business continuity purposes the benefit is paid back into the company and is therefore typically treated almost as taxable trading receipt

Due to the Relevant Life Trust our advisers will help you set up, the benefit will typically be paid to your loved ones tax-free

Depending on how the policy is set up and its purpose, premiums may be a tax deductible business expense, but check with your accountant and your local tax office

Premiums qualify for corporation tax relief, income tax relief and National Insurance relief when compared with a Life Insurance policy you take out personally

Adding Illness Protection

Add Critical Illness Cover for a more comprehensive protection that includes cover for a list of critical illnesses / injuries as well as death

Any protection against illness must be paid for separately for tax reasons, perhaps with Directors Income Protection

Level of Cover

The sums assured with Keyman Insurance will depend on your business metrics and how key a particular individual is to the company

With Relevant Life Cover, the sums assured are typically represented as multiples of your remuneration in the form of salary and dividends

Compare Top 10 UK Providers

Takes approx. 60 seconds
  • £
Verified by Norton Symantec icon
 Or Call Us

Compare Best UK Business Protection Providers In 2024

Keyman Insurance


AIG Life is the UK arm of US insurance giant American International Group Inc. The insurer got its foothold in the UK protection market when it acquired Ageas Protect in 2014.

  • Maximum entry age: 86 for Life only / 75 for Life and Critical Illness Cover
  • Minimum term: 3 years
  • Maximum term: 70 years for Life only / 50 years for Critical Illness Cover
  • Maximum cover: No maximum
  • Critical illnesses covered: 41, plus 10 additional critical illnesses


Aviva was formed out of the Norwich Union-CGU PLC merger in 2000, but the company can trace its roots back to the 17th century.

Aviva Key Man Insurance forms part of its Business Life Insurance Options policy.

  • Maximum entry age: 89 for life only / 64 for Life and Critical Illness Cover
  • Minimum term: 1 year
  • Maximum term: 50 years
  • Maximum cover: No maximum for Level Life / £5 million for increasing life / £3 million for Life and Critical Illness / £2 million for Life and Critical Illness Cover with Total Permanent Disability
  • Critical illnesses covered: 41, plus 11 additional critical illnesses

Legal & General

Legal & General was founded in 1836 and has since grown to become an international provider of insurance, pension and investment products.

  • Maximum entry age: 77 for Increasing Life Insurance / 67 for Life and CIC and Increasing Life and CIC / 74 for Decreasing Life / 64 for Decreasing Life and CIC
  • Minimum term: 1 year for Life / 2 years for Increasing Life Insurance and CIC / 5 years or Decreasing Life and CIC
  • Maximum term: 50 years for Life only / 40 years with added Critical Illness Cover
  • Maximum cover: Unlimited
  • Critical illnesses covered: 39, plus 2 additional critical illnesses

Royal London

Royal London began as a friendly society in 1861, later changing to a mutual society in 1908. Today, Royal London is now the UK’s largest mutual life, pensions and investment company.

  • Maximum entry age: 88 for Life Cover / 69 for Critical Illness Cover
  • Minimum term: 1 year for Life / 5 years for Critical Illness Cover
  • Maximum term: 72 years for Life only / 50 years with added Critical Illness Cover
  • Maximum cover: No maximum for Life / £3 million for Level Critical Illness Cover / £1.2 million for Increasing Life and Critical Illness Cover
  • Critical illnesses covered: 46, plus 14 additional critical illnesses

Relevant Life Cover


Aegon was founded as Scottish Equitable in 1831. Dutch insurer Aegon N.V. bought a 40% stake in Scottish Equitable in 1994 and became a 100% stakeholder in 1998.

Maximum Cover:

  • Up to age 35: 30 times remuneration
  • Age 36-50: 25 times remuneration
  • Age 51-60: 20 times remuneration
  • 61+: 15 times remuneration
  • No financial evidence required for sums less than £2,500,000

Legal & General

In 2015, Legal & General won the ‘Life Insurance Provider of the year’ award from the Personal Touch Awards.

Maximum Cover:

  • Age 18-49: 25 times remuneration
  • Age 50-59: 20 times remuneration
  • Age 60-73: 15 times remuneration
  • No financial evidence required for sums less than £3,500,000

Scottish Widows

Scottish Widows is a highly praised provider of pension and insurance products across the UK with nearly 6 million customers.

Maximum Cover:

  • Level Term: £25 million
  • Increasing Term: £15 million (at point of policy inception, increases permitted to £30 million)


Zurich owns locations in more than 170 countries and provides insurance products and services on a global scale.

Maximum Cover:

  • Age 16-39: 30 x total remuneration
  • Age 40-49: 20 x total remuneration
  • 50+ : 15 x total remuneration

Key Person or Relevant Life Insurance?

To summarise, Relevant Life Insurance protects an individual employee and their family in an incredibly tax-efficient manner should an individual pass away.

Keyman Insurance is there to provide business continuity or to repay a loan / investor should a key person crucial to the running of the business die or become critically ill.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We know that our clients give so much to their businesses. They therefore deserve first class service when it comes protecting that business and their interest in it. Here are just a few reasons why it makes sense to talk to us:

People often confuse Relevant Life Cover and Keyman Insurance, but they’re two very different policies designed with two very different purposes in mind.

If you’re still not sure which is best for you, please do not hesitate to pop us a call on 02084327333.

Compare Top 10 UK Providers

Takes approx. 60 seconds
  • £
Verified by Norton Symantec icon
 Or Call Us

Contact Us

Head Office & Pensions and Investments
Senator House
85 Queen Victoria Street
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Drewberry London Office MapDrewberry Brighton Office Map

If you are unhappy with our service, we have a complaints procedure, details of which are available upon request. If you are unhappy with how your complaint has been dealt with, you may be able to refer your complaint to the Financial Ombudsman Service (FOS). The FOS website is www.financial-ombudsman.org.uk.

Drewberry Ltd is registered in England and Wales. Companies House No. 06675912

Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

Drewberry Ltd (Financial Conduct Authority No. 505473) is an Appointed Representative of Quilter Wealth Limited and Quilter Mortgage Planning

Limited, which are authorised and regulated by the Financial Conduct Authority.


Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies including for ad personalization.

If you would like to know more about cookies and how to manage them please view our privacy & cookie policy.