Get the same life cover for significantly less. Relevant life insurance is paid for by your limited company as an allowable business expense — with no benefit-in-kind charge on you personally, saving higher-rate taxpayers 30-50% versus personal cover.
A relevant life policy is taken out by your limited company on your life. The company pays the premiums; the benefit is written into a discretionary trust from day one, with your family as beneficiaries. On death during the term, the trust receives the sum assured and distributes it to your family — outside your estate, free of inheritance tax, without probate delay.
The policy must meet specific legislative conditions: it can only pay out on death (or terminal illness), must end by age 75, cannot have a surrender value, and the benefits must go to family members or dependants via the trust. Within those rules, it functions exactly like high-quality term life insurance — because that is what it is.
Relevant life insurance is designed for people who operate through a limited company and want a tax-efficient way to protect their family. It is particularly suitable for the following situations.
Directors who receive a salary through their limited company can usually qualify for relevant life insurance.
Contractors who combine a salary with dividend income can often secure higher levels of cover based on their total remuneration.
Independent contractors operating through their own limited company can often benefit from company-funded life cover.
Higher-rate taxpayers often achieve the greatest tax savings by paying premiums through the company rather than personally.
Relevant life insurance is ideal for contractors who want to provide financial security for their spouse, children, or other dependants.
Relevant life insurance is generally unavailable to sole traders and traditional partnership partners because there is no employing company to own the policy.
A £100 monthly premium is treated very differently depending on how it's paid.
Paid personally by a higher-rate taxpayer, the company must pay enough salary or dividends to leave £100 after tax — costing roughly £150 to £170 once corporation tax, income tax and NI are accounted for. As a relevant life premium, the company pays £100, claims relief, and no BIK, income tax or NI arises at all.
The all-in saving typically lands between 30% and 50%, depending on your tax band. HMRC allows this where premiums are part of the remuneration package — the 'wholly and exclusively' test.
Insurers typically allow relevant life cover of 15 to 30 times total remuneration, depending on age — and crucially, ‘remuneration’ here includes salary and dividends, not salary alone. A contractor drawing £12,570 salary and £50,000 dividends has a remuneration base of £62,570, supporting cover well in excess of £1 million at the younger age bands.
This dividend-inclusive assessment is one of the quiet advantages of the relevant life route for tax-efficient contractors, whose salary-only figure would justify very little cover. We evidence the full remuneration picture at application.
Contracting careers evolve — companies are closed, contractors move inside IR35 or take permanent roles. Relevant life policies handle this better than commonly assumed: most can be converted to a personal policy, transferred to a new employing company, or continued with premiums paid personally (losing the tax treatment but preserving the underwritten cover).
Preserving cover matters more as you age or if your health changes — the underwriting you passed at 38 may not be repeatable at 48. We build the exit flexibility into the recommendation from the start rather than treating it as an afterthought.
Relevant life insurance handles the family life cover element of a contractor’s protection package with maximum tax efficiency. It does not cover critical illness (the legislation does not permit it) and it is not income protection — so a complete contractor package typically pairs relevant life cover with personal or executive income protection and, where wanted, standalone critical illness.
We design the package as a whole: each element through the structure — company or personal — that delivers it at the lowest true cost.
No — this is the heart of the product. Premiums paid by the company do not create a P11D benefit, no income tax arises on you, and no employer or employee National Insurance is due. Combined with corporation tax relief on the premiums, this is what generates the 30% to 50% net saving against personally paid cover.
Yes — insurers assess relevant life cover limits against total remuneration including dividends, typically allowing 15 to 30 times depending on age. For tax-efficient contractors with low salaries, this dividend inclusion is what makes substantial cover possible through the relevant life route.
Your family. The policy is written into a discretionary trust from outset, with your family and dependants as beneficiaries. The company pays the premiums but has no claim on the benefit — on death, the trust pays your family directly, outside your estate, free of inheritance tax and without waiting for probate.
Most policies offer continuation options: convert to a personal policy, transfer to a new employing company, or continue paying premiums personally without the tax advantages. The underwritten cover is preserved in each case, which matters greatly if your health has changed since the policy started. We select insurers with strong continuation terms.
No — the legislation restricts relevant life policies to death and terminal illness benefits only. Critical illness cover must be arranged separately, either personally or through other business protection structures. We package the elements together so nothing is missed.
The saving is smaller but usually still real — corporation tax relief on the premium alone typically beats funding the same premium from taxed income. We run the comparison with your actual figures; for most limited company contractors at any tax band, relevant life wins for the family life cover element.