Cookie Use

Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacycookie policy.

Director Life Insurance

Get My Instant Quotes
Compare Top UK Insurer Quotes Logos

What is Director Life Insurance?

Life Insurance is there to pay out a lump sum if you pass away during the term of the policy. It can be used to protect your loved ones, helping them cope financially through a very difficult time.

Directors are in a unique position when it comes to Life Insurance – you have the option to to take out a tax-efficient policy to protect your loved ones which is formally called Relevant Life Insurance.

  • Relevant Life Insurance allows you to insure a multiple of your remuneration – often up to 25 times.
  • The policy is owned and paid for by your limited company, a feature that provides tax-efficiency and ultimately premium savings over paying for the policy personally.
  • The benefit is paid into a specialist trust set up at the outset of the policy, thereby keeping the benefit outside the business and sidestepping any tax issues on a claim.

Relevant Life Cover enables small businesses to provide their employees with a Death in Service Benefit even though they may not have enough staff to set-up a group scheme.

What Does Director Life Insurance Cover?

Relevant Life Insurance is designed to pay out on death or diagnosis of terminal illness (where you’ve been told you have fewer than 12 months to live).

Most Relevant Life Insurance offers a level benefit, where the sum insured doesn’t fall over time. This provides a constant level of protection for your loved ones across the life of the policy.

Can I Include Critical Illness Cover?

The short answer is no. The tax benefits of Relevant Life Insurance extend only to life cover – HMRC hasn’t approved the tax status of Relevant Life Insurance with added Critical Illness Cover.

If you’re looking for sickness insurance for company directors, we’d generally recommend considering Directors Income Protection over Critical Illness Cover.

Can I Get Directors’ Life Insurance?

Group Life Insurance is a popular employee benefit for companies to offer their staff, but for the smallest companies in the UK it simply isn’t viable.

Here, Relevant Life Insurance can step in where there are too few employees for Group Life Insurance; this includes companies where the Director is the only member of staff.

The key thing with Relevant Life Insurance is that there must be a company structure to own and pay for the policy.

Not everyone who works for themselves does so through their own limited company. Sole traders and those working for umbrella companies are unable to get this type of cover.

However, it’s perfectly possible to get Life Insurance on a personal basis if you work in this way and we’re more than happy to advise you in this area.

Compare Top 10 UK Insurers
Takes approx. 60 seconds

Do I Need Company Life Insurance?

No one wants to think about it, but it’s something all responsible adults with financial dependants should consider.

  • What would happen to your loved ones if you suddenly weren’t around anymore?
  • Could they keep up with the mortgage / rent without your income?
  • How would they meet everyday expenses, such as bills, groceries or even school fees?

If the answer is that you don’t know or that your family would likely struggle, Life Insurance is a way to offer both you and your loved ones valuable peace of mind.

Your family can receive a tax-free lump sum to repay any outstanding debts and keep up with daily living expenses without your income.

Why Life Insurance?

According to the 2016 claims statistics of LV, one of Britain’s biggest Life Insurance providers:

  • The average age for a Life Insurance claim for both men and women was 61
  • The youngest claimant was just 23 years old
  • Average policy age at the point of claim was only 8 years.

What’s the Risk of Passing Away?

We’ve taken the example of three healthy men of various ages and calculated the risk of them passing away during the next 15 years using the below Life Expectancy Calculator.

Their risk of death is as follows:

Age 30

Age 40

Age 50

1 in 47

1 in 23

1 in 10

How Much Does Director Life Insurance Cost?

As mentioned, Director Life Insurance can offer significant savings over personal Life Insurance because the premiums are paid for by the business.

Tax liabilities vary depending upon a significant number of factors, including your personal circumstances and, while contractors should seek advice from an accountant on the specific taxation issues relating to their business, in general terms Contractor Life Insurance:

  • Is not classed as a taxable benefit in kind
  • Is paid for by the business and treatable as a tax deductible business expense
  • Is excluded from both employee and employer National Insurance calculations
  • Has a payout that does not form part of your lifetime pension allowance, unlike most group schemes.

Given these factors, Contractor Life Insurance is typically a notably cheaper option than personal cover. The cost of cover is based on the same underlying issues as for all Life Insurance, including:

  • Your age
    The older we are the more likely we are to pass away during the life of the policy and so the more expensive premiums will be
  • Your medical history
    Insurers may ‘load’ (increase) premiums based on any pre-existing medical conditions you might have
  • Your smoker status
    Smokers are more likely to die prematurely, and so are charged more in Life Insurance premiums
  • The amount of cover
    The more you look to cover yourself for, the more premiums will cost
  • Length of policy / policy term
    Similar to your age, the older you will be at the end of the policy the greater the risk of you passing away during the policy’s term, which will be reflected in higher premiums.

How is Director Life Insurance Taxed by HMRC?

The table below provides an example of the tax savings Director Life Insurance offers over personal life cover.

Personal Life Cover
Relevant Life Cover
Cost to Individual
Monthly Premium
£100.00
£0.00
Employee NI Contribution
£3.45
£0.00
Income Tax
£68.97
£0.00
Cost to Business
Premium
£0.00
£100.00
Employer NI Contributions
£23.79
£0.00
Gross Cost
£196.21
£100.000
Corporation Tax
-£37.28
-£19.00
Total Cost
£158.93
£81.00
Total Savings

49.03%

By opting for Relevant Life Insurance over personal Life Cover you would make savings of 49.03%. That is a saving of £77.93 per month or £935.13 per year.

Relevant Life Insurance Calculator

Calculate the tax savings you can make by taking out a company paid Relevant Life Insurance policy instead of a personal Life Insurance policy.

  • £

Compare Best UK Director Life Insurance Companies

 

AEGON

Aegon

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 x remuneration
  • Age 36-50: 25 x remuneration
  • Age 51-60: 20 x remuneration
  • 61+: 15 x remuneration
  • No financial evidence required for sums less than £2,500,000
legal & general

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 x remuneration
  • Age 50-59: 20 x remuneration
  • Age 60-73: 15 x remuneration
  • No financial evidence required for sums less than £3,500,000
royal london

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 Cover

  • 30 x remuneration for clients aged under 40 years
  • 25 x remuneration for clients aged 40-49 years
  • 20 x remuneration for clients aged 50-59 years
  • 15 x remuneration for clients aged 60 years+
scottish widows

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

Zurich

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
Curved wave background

Common Director Life Insurance Questions

    Curved wave background

    Get Director Life Insurance Quotes & Expert Advice

    When you’re looking for Life Insurance for Company Directors, it’s important you get advice.

    Our experts are here to help you through a number of complications surrounding Life Insurance for Directors. Including the Relevant Life Trust which must be set up alongside such a policy to prevent any claim being paid back into the business and make sure it reaches your beneficiaries free from tax.

    Why Speak to Us…

    We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

    • There is no fee for our service
    • We are independent and impartial
      Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
    • We’ve got bargaining power on our side
      This allows us to negotiate better premiums for you than you going direct yourself.
    • You’ll speak to a dedicated expert from start to finish
      You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
    • Benefit from our 5-star service
      We pride ourselves on providing a 5-star service, as can be seen from our 2428 and growing independent client reviews rating us at 4.92 / 5.
    • Gain the protection of regulated advice
      You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
    • Claims support when you need it the most
      You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.
    Tom Conner Director at Drewberry

    If you’re looking for Life Insurance as a Company Director, getting independent advice is the best place to start.

    We can talk you through the best options and explain the way the tax position works to get you the best life cover for you, your business and your family.

    Don’t hesitate to pop us today on 02084327333 or email help@drewberry.co.uk.

    Tom Conner
    Director at Drewberry

    I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.

    Brendan Kelly
    26/09/2019
    Compare Top 10 UK Insurers
    Takes approx. 60 seconds

    Or call us on 0208 432 7333

    Compare Top UK Insurer Quotes Logos
    Contact Us
    Head Office & Pensions and Investments
    Millennium Bridge House
    2 Lambeth Hill
    London
    EC4V 4GG
    Personal Insurance & Accounts Payable
    Telecom House
    125-135 Preston Road
    Brighton
    BN1 6AF
    Drewberry London Office MapDrewberry Brighton Office Map
    Our Core Principles
    • 1You Come FirstWe are a client focused business who always aim to put you first.
    • 2We are ExpertsTo provide you with the best advice, we need to know our stuff!
    • 3We are HumanWe are real people with feelings who are here to help you.
    • 4We are ProfessionalProviding a 5-star service requires a professional approach to everything we do.
    • 5We are here to EducateWe don't believe in sales, we are here to educate so you can make informed decisions.