Relevant Life Cover is a tax-efficient life insurance policy, allowing companies to offer a death-in-service benefit to its employees (including salaried directors). It’s set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the person insured. The proceeds go directly to the employee’s family or financial dependents.

The legislation covering relevant life insurance means it is:

• Tax-efficient for the employer – counts as a tax deductible business expense.
• Tax-efficient for the employee – not deemed a benefit-in-kind from the employer, therefore the employee does not pay income tax or national insurance on the policy premiums. This can be a significant saving for a higher or additional rate taxpayer.
• Tax efficient for the beneficiaries – the payout is received free of income tax and, generally, any inheritance tax liability. Importantly, unlike group life insurance, Relevant Life Insurance is a ‘non-registered’ arrangement so any payout does not count towards the employee’s Lifetime Pension Allowance. Therefore, the family will not have to pay tax on any lump sum payment in excess of the lifetime allowance when they come to claim on the employee’s Relevant Life Insurance. This can be a significant consideration for employees who may be near the limits of their lifetime pension allowance.

• Businesses too small for a group life scheme
• High-earning employees who might exceed their personal pension lifetime allowance. Registered group life schemes are included in pension legislation, meaning any paid claim is included in the employee’s pension fund. Claims paid under Relevant Life Cover don’t count towards a person’s lifetime allowance
• Members of group life schemes who want to top up their benefits (some group life schemes can be restrictive)

Billings Mortgage & Insurance Services Limited.
Registered Office: Derngate Mews, Derngate, Northampton NN1 1UE.
Company Registration: Number: 10790453. Registered in England and Wales.

Billings Mortgage & Insurance Services Limited is an appointed representative of Sesame Ltd which is authorised and regulated by the Financial Conduct Authority.