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What is relevant life insurance for directors? 

As a company director, have you ever considered that it may be more beneficial to you to insure your life through your business rather than through a personal life insurance policy? Believe it or not, this is absolutely the case.

We pride ourselves on being leading experts in relevant life insurance for company directors. For more information contact us on 0800 009 6559 or CLICK HERE

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Relevant life insurance is essentially a ‘death in service’ policy designed to pay out a tax-free sum to the family or dependents of the employee on their passing away, or if they get diagnosed with a terminal illness. The business will pay the policy premiums which will be written into a discretionary trust – this will then pay out to the employee’s beneficiaries if they die whilst still employed by this company.  

The most common reason for taking out relevant life cover is for a business to provide cover for its directors or senior staff. A company can take out multiple relevant life insurance policies to protect several directors or key members of staff.  

Relevant life insurance for directors vs personal life insurance  

With relevant life insurance, you have a way of getting the great cover you deserve, whilst also benefitting from a big saving in tax – all HMRC approved of course!  

If you are paying a basic tax rate, there is a potential saving of 31.5%* every month when using a relevant life plan as opposed to paying, for example £100 a month for personal life insurance. If you pay more tax than this, the savings could be even greater.

The premiums you would pay for a director’s life insurance policy are classed as an allowable business expense, meaning all of the paid benefits and premiums from this qualify for:  

  • Corporation tax relief 
  • Full income tax relief  
  • National insurance relief 

Meaning there is the potential for reduced premiums with an up to 49%** saving! This could lead to a very cost-effective outcome for yourself, and your company compared to a personal life insurance policy.

Converting your relevant life policy to personal cover  

One of the best advantages of relevant life cover is the fact that this type of policy is now portable. This means that if you ever choose to leave or sell the business you have the option of taking your policy with you. You can either: 

  • Convert your policy to personal cover in which case you would then be responsible for paying the premiums yourself
  • If joining another business your new employer will be able to take over the policy, provided they are happy with this arrangement

Relevant life insurance comparison 

If you are still asking yourself why relevant life insurance is the right choice for you, here are the advantages listed below compared to other types of policies. 

 Relevant Life Insurance Personal Life Insurance Group Life Insurance Key Person Life Insurance 
Provides family protection YES YES YES NO 
Tax deductible premiums YES NO YES YES 
Flexible (e.g. portable) YES YES NO NO 
Medical underwriting YES YES NO YES 
Critical illness Cover options YES (limited options) YES NO YES 
Paid personally or by company COMPANY PERSONALLY COMPANY COMPANY 

Are you in need of life insurance advice? 

To make sure you are getting the right cover at the right price to suit your needs, don’t hesitate to get in touch with one of our EXPERTS to get FREE and FRIENDLY advice by calling 0800 009 6559 or CLICK HERE

Our normal office hours are: 

  • Monday to Thursday 8am to 8pm 
  • Friday 8am to 3pm 
  • Saturday 10am to 2pm 

*Statistics provided by unbiased.co.uk 

**According to Legal and General

Useful resources 

Here are some useful resources for anyone looking to learn more about relevant life insurance for directors.

MoneyPeopleOnline – What is relevant life insurance and how does it work?

Finder.com – Life insurance statistics

Statista – Life insurance industry in the United Kingdom (UK)

iam|INSURED – Frequently asked life insurance questions

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