What Is The Eligibility Criteria For Relevant Life Insurance?

I am a company director looking for some life insurance. I came across Relevant Life Insurance and was wondering what the eligibility criteria was to take out cover?

Question asked by Stephen Jones

Any employee of a business can have Relevant Life Insurance arranged by their employer.

An employer can include:

  • Limited companies
  • Partnerships
  • Charities
  • Any other structure where there’s an employer / employee relationship.

Who Can Have Relevant Life Insurance?

Those who can have Relevant Life Insurance include:

  • Employees
  • Company directors
  • Salaried partners taxed as schedule E.

However, not everyone can have a Relevant Life Insurance policy. Those ineligible include:

  • Equity partners
  • Sole traders taxed under schedule D.

Also, Relevant life policies can only be single life policies, so you can’t include a spouse.

Tax-Efficient Life Insurance

Relevant Life Insurance is an incredibly tax-efficient way to arrange life cover. This is compared to paying for premiums out of your net (post-tax) income.

This has two main benefits:

  • Premiums are not a benefit in kind and so are not subject to income tax
  • Premiums are free from national employment contributions for both the employer or employee.

Moreover, thanks to the trust structure set up alongside the policy, the payout is typically free from inheritance tax.

If you would like any more information about relevant life insurance please see our Relevant Life guide. Alternatively, contact one of our team of advisers on 02084327333.

I had a great experience with Drewberry, they have a lot of knowledge and expertise with life insurance and income protection and were able to advise me and arrange suitable products. Highly recommend.

Lachlan Mellings
12/08/2020
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