Relevant life insurance

Frequently Asked Questions:

Relevant life insurance is a type of insurance policy that a business could use to provide life insurance for its individual employees. Relevant life policy insurance is the death-in-service benefit for employees outside of other registered group life schemes. It would be used in situations where an employee has no other life cover, or if they have no other life cover at all. The term “relevant” means that it can only be used when there are no other options available.

The main difference between relevant and non-relevant life insurance is that relevant life insurance cannot be used as part of another scheme. For example, if an employer offers a pension scheme with a certain level of benefits, then this will not count towards relevant life insurance. If a person does not qualify for any other form of life insurance, then relevant life insurance may be their only option.

Protecting your business in case of if a key worker passes could always be overlooked in which a relevant life insurance policy could always help employees. A relevant policy pays out the lump sum if a company employee passes away. A good relevant life policy could save an employee up to 50% of tax as compared to regular life insurance plans. A relevant life policy also provides additional protection for businesses that offer health and dental care to their employees. This is because if an employee dies from illness while on holiday, the family member will receive a payout.

How is tax relief granted on the premium?

Tax reliefs are granted based on the amount of premiums paid by the employer. Tax reliefs are given on the basis of the total cost of the policy. However, tax reliefs are not granted on the basis of the amount of money that is actually spent on the policy. Instead, tax reliefs are granted on the basis of how much the employer spends on the policy. HMRC has also clarified this since April  6 2006 in the United Kingdom. As per the guidelines, to qualify under the wholly or exclusively rules, the policy premiums must be as per the employee’s remuneration.

What happens after the employee dies?

After the employee dies, the beneficiary receives the full value of the policy. There is no waiting period before the payment is made. In addition to paying the lump sum, the insurer will pay the applicable taxes.

Who qualifies for relevant life insurance?

Anybody who works for a UK company can apply for relevant life insurance. However, the most common people who get relevant life insurance are:

  • Employees who do not have any other life insurance policies.
  • Employees who work for smaller companies.
  • Employees who travel frequently.
  • Employees who are self-employed.
  • People who are looking to buy a house.
  • Individuals who want to protect themselves against financial risks.
  • Business owners who want to ensure that their staff members are protected.
  • Anyone who wants to make sure that he/she gets his/her loved ones’ financial needs met.

Why does the premium not create a P11D charge?

If you are buying a relevant life insurance policy for yourself, then you should know that the premium does not create a P11d charge. You need to pay the premium directly to the insurer. The premium is paid to the insurer and is not deducted from your salary. Therefore, the premium does not create any deductions from your income.

Is my employer required to pay for me to take out relevant life insurance?

Your employer is not required to pay for you to take out relevant life coverage. However, it is recommended that employers provide relevant life insurance cover for their employees. If you are employed in a small business, chances are that your employer may already provide relevant life insurance cover. But if you are employed in a large corporation, you might need to ask your employer about whether they provide relevant life insurance cover or not.

Why does the benefit not form part of the annual or lifetime allowance?

The benefit does not form part of the yearly or lifetime allowances. You can only claim the benefits when you die. When you pass away, the insurer will pay out the entire sum of the policy.

Does the relevant life insurance policy affect my pension entitlement?

No. Your pension entitlement remains unaffected even if you have a relevant life insurance policy.

Can I transfer the relevant life insurance policy to someone else?

Yes. You can transfer the relevant life insurance plan to another person.

How is the relevant life policy insurance plan treated for inheritance tax?

You cannot transfer the relevant life insurance to anyone else. It is considered an asset that passes to the beneficiaries upon your death. The beneficiaries receive the full value of the plan. They will not have to pay any inheritance tax.

When can I start taking out relevant life insurance?

You can start taking out relevant life coverage at any time. You can start with a term plan or a permanent plan.

Do I have to pay anything upfront to start taking out relevant life protection?

No. There is no initial payment requirement when you purchase a relevant life insurance policy from us. However, you will be charged a monthly fee depending on the type of policy you choose.

What happens if I stop paying the premiums?

If you fail to pay the premiums, the policy will lapse. This means that the insurer will cancel the policy and you will lose all the money you invested. You will also lose all the benefits that you were entitled to.

How a relevant life policy can cut company costs?

A relevant life insurance policy can help reduce the total cost of running a business. For example, if you are self-employed, you can use the money saved through relevant life insurance to invest in other areas of your business. In addition, the policy can help protect against financial risks associated with employee turnover.

What are relevant life plans?

Relevant life policies are designed to meet specific needs. These include:

Term Insurance – Term insurance provides temporary protection against unforeseen events such as illness, unemployment and retirement. A term plan usually lasts between three months and five years.

Permanent Life Insurance – Permanent life insurance offers long-term protection against unexpected events like disability and old age. Unlike term insurance, permanent life insurance lasts throughout your life.

Critical Illness Cover – Critical illness cover helps protect against the risk of medical expenses arising from serious illnesses. If you become seriously ill, it can provide critical care support until you recover.

Disability Income Protection – Disability income protection pays out a lump sum if you become disabled due to an accident or disease.

Life Assurance – Life assurance protects the family members of deceased individuals by providing them with cash payments in case they suffer an economic loss due to the death of the insured individual.

What does relevant life insurance offer?

Relevant life insurance has many advantages over traditional life insurance. Here are some examples:

  • It’s cheaper than term life insurance
  • It’s more flexible than term life insurance
  • There is no need to make regular premium payments
  • The policy can last throughout your lifetime
  • It can be used to fund investments
  • It can be transferred to someone else
  • It can be combined with other types of insurance
  • It can be taken out even if you don’t own a home
  • It can be taken without having to prove insurability
  • It can be taken regardless of health status
  • It doesn’t require a medical examination
  • It can provide for both current and future needs
  • It can be tailored to suit your requirements
  • It can be taken at any age
  • It can be taken with other forms of insurance
  • It can give you peace of mind
  • It can be taken for your children
  • It can be taken on your behalf

Is relevant life cover tax deductible?

Yes, it is! The amount you save on taxes each year depends on how much you have paid into your relevant life insurance policy.

Can these plans be used for business protection?

  1. Yes, they can. Relevant life insurance can also be used to protect businesses against certain risks. This includes protecting against:
  2. Loss of key employees
  3. Unemployment
  4. Business failure
  5. Inflation
  6. Employee benefits
  7. Rent increases
  8. Taxes
  9. VAT
  10. Other risks associated with running a business

How do I know whether my existing life insurance policy is relevant?

If you already have a life insurance policy, you should check that it meets the criteria set out above. You may wish to consider taking out a new relevant policy.

 Is a relevant life insurance policy used by a sole trader?

A relevant life insurance policy is not restricted to companies only. It can be taken out by sole traders too. However, this type of policy will typically cost more than a company policy because there is less competition.

What is an allowable business expense in relation to a relevant insurance policy?

An allowable business expense is something that is deducted from gross income when calculating taxable profits. Allowable business expenses include things like rent, salaries, wages, interest, etc.

You can deduct up to £1,000 per person as an allowable business expense. If you’re self-employed, you can deduct the same amount as a salary. This allowance is subject to limits.

What is the role of National Insurance in Relevant life insurance policy?

National Insurance contributions are compulsory contributions made by employers to the government. National Insurance contributions are used to pay for social security benefits such as pensions and state benefits. They are charged based on the number of hours worked. For example, if you work 40 hours a week, you’ll contribute £5.35 to NICs every time you earn £100. When you take out a relevant life insurance policy, you must declare the value of the policy.

What is the use of relevant life plans?

  • Relevant life plans are designed to help people plan ahead for their financial needs. Relevant life plans allow you to make decisions about your future now, rather than later. They can be used to:
  • Protect your family’s finances
  • Provide for your funeral costs
  • Give you peace of mind
  • Make sure you have enough money for retirement
  • Pay off debts or mortgages
  • Cover the cost of education
  • Cover the cost of buying a house
  • Provide for your child’s education
  • Protect your business interests
  • Fund your children’s inheritance
  • Provide for your partner’s care after you die
  • Provide for your own care after you die
  • Protect your estate

What does relevant life cover offer?

Relevant life cover provides you with a range of options to choose from. These include:

Term Life Cover – Provides coverage over a fixed period of time. The term length depends on how old you want your beneficiaries to receive payments.

Endowment Life Cover – Provides a lump sum payment at death. Payments continue until the age specified by the policyholder.

The whole of Life Cover – Provides a guaranteed lifetime benefit. There is no limit to the amount paid under the whole of life cover.

What is the use of Lifetime Pension Allowance?

Lifetime Pension Allowance or lifetime allowance is a tax break available to some individuals who are aged 55 or older. LPA allows you to reduce the amount of pension savings you need to make before reaching the qualifying age of 55. You can also get additional tax relief on any pension saving you do above what is needed to reach the qualifying age.

How can I save income tax from Insurance plans?

If you are eligible for the Lifetime Allowance, then you may be able to claim back part of your contribution to your pension scheme. You will only be able to claim back a percentage of your contribution of income tax depending on how much you contributed.

What are relevant life plan benefits?

Benefits provided by relevant life plans depend on the type of plan chosen. Some plans provide you with protection against illness or disability, while others protect your assets during times when you cannot work. Other plans may provide you with the option to buy a home, fund your child’s education or even pay off your mortgage.


Why Choose Us?

A relevant life insurance policy provides a death benefit on the basis of the insured’s salary. This is different from most forms of life insurance which are based on age. A relevant life insurance policy usually covers the whole period of employment. However, some employers do choose to pay out a lump sum after a set number of years of service. We know it’s difficult to choose from many options so we can help you with your requirements.

RelevantLifePolicyInsurance.co.uk is a trading style of NeedingAdvice.co.uk Ltd who are registered as a limited company in England & Wales No. 12978572. Registered Address: 107-109 Far Bank, Shelley, Huddersfield, United Kingdom, HD8 8HT. NeedingAdvice.co.uk Ltd is an Appointed Representative of Rosemount Financial Solutions (IFA) Ltd which is authorised and regulated by the Financial Conduct Authority (FCA). Entered on the FCA Register (https://register.fca.org.uk/) under reference 535515. The information contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

We always believe to provide you with the best life insurance deal for you and your employees. We are here to help you.

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