What’s the Difference Between Personal Life Insurance and Relevant Life Cover?

I’m a company director and I’ve heard about Relevant Life Insurance through my accountant. However, while the tax savings sound good, I’m curious about how a Relevant Life policy works. Just how is it different from personal Life Insurance?

Question asked by Robert Hamlin

Relevant Life Insurance and personal Life Insurance both achieve roughly the same end goal. Each pays out a lump sum if you pass away.

However, the way each policy achieves this goal — and the premiums you therefore pay — are different. Ultimately, the major difference between personal Life Insurance and Relevant Life Cover is who pays for it and the tax savings that you can make as a result.

What is Personal Life Insurance?

You pay for personal Life Insurance as an individual, from your own bank account. It pays out a lump sum to your family if you pass away.

What is Relevant Life Insurance?

Meanwhile, Relevant Life Insurance is paid for by a business or other eligible entity which employs staff.

A Relevant Life policy (RLP) is a tax-efficient Life Insurance. Contractors and directors of their own limited companies are among the most common policyholders.

However, it’s also available wherever there’s an employer / employee relationship. For example, this may be where a business is not large enough to offer a full Group Life Insurance scheme to staff.

With Relevant Life Cover, it’s incredibly tax-efficient. Premiums can be up to 49% cheaper than a personal policy once you take into account income tax, national insurance and corporation tax savings.

Key Differences Between RLP and Personal Life Cover

The below table provides an overview of the main policy differences between a personal life insurance policy and Relevant Life Cover.

Personal Life Insurance

Relevant Life Insurance

Who Pays For It?

You, the insured, from your own personal bank account.

Your employer, typically your limited company if you’re a company director / contractor.


Available to anyone within the minimum / maximum age range of the policy.

Available to company directors, contractors and certain other workers.

Level of Cover

Chosen by you. You’ll typically align this with an outstanding mortgage or the cost of ensuring your family are financially secure after your death.

Fixed at a multiple of your remuneration. This will typically include salary and dividend income. It’s possible to insure up to 15x income depending on your age.

Type of Cover

Level (the benefit stays fixed across the life of the policy) or decreasing (sees the benefit fall across the life of the policy, often alongside a repayment mortgage).

The vast majority of all Relevant Life policies offer level cover, where the benefit doesn’t decrease with time.

Critical Illness Cover?

Yes, add Critical Illness Cover to ensure a payout should you become critically ill as well as if you pass away.

No, HMRC has not signed off adding Critical Illness Insurance to a Relevant Life policy.

Trust Available?

In most cases yes, it’s an optional, but often sensible, additional step.

It is mandatory to write a Relevant Life Policy into trust from the outset.

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