Relevant Life Insurance Guide for Company Directors
Protect your family. Let your company pay for it.
Why Consider Relevant Life Insurance?
- Paid for by Company
- Reduce Effective Cost
- Potential Tax Relief
- Structurally Tax-Smart
- Tax-advantaged positioning
What is Relevant Life Insurance?
Relevant Life Insurance is an employer-paid life insurance policy designed to provide benefit upon death for eligible employees, including company directors.
The policy is written into Trust*, with the benefits intended for the employee's chosen beneficiaries, rather than the company.
This can be a particularly attractive option for directors of small and medium-sized limited companies (SMEs) who want personal life cover, but don't have access to a traditional death-in-service scheme.
*Trusts are not regulated by the Financial Conduct Authority.
How does Relevant Life Insurance differ from Key Person Protection?
Although both can involve a company paying for insurance, they serve different purposes. Relevant Life Insurance provides personal protection for an employee or director's beneficiaries, while Key Person Insurance protects the business against the financial impact of losing an important person.
What happens to Relevant Life Insurance if I leave the company?
This will depend on your policy and insurer. There may be options to continue the policy, transfer its ownership or change the payment arrangements. As the options available can vary between insurers and policies, you should obtain advice before making any changes to an existing Relevant Life policy.
What savings could I make with a Relevant Life Insurance policy?
Savings depend on your salary, tax position, company circumstances, premium and applicable tax rates. For a higher-rate taxpayer, the effective cost of a Relevant Life policy could be up to around 50% lower^ than paying for an equivalent policy personally.
Top 5 reasons Company Directors should consider Relevant Life insurance
If you're a director of a UK limited company and pay for life insurance from your personal bank account, it could be costing you significantly more than it needs to.
If you are a higher-rate taxpayer, paying for cover out of your own pocket means you are using post-tax personal income for an expense that your business could pay for pre-tax.
A Relevant Life policy is a type of life insurance that an employer can take out for an employee, such as an eligible company director.
Potential key advantages for higher earners:
- Up to 50% lower effective cost for higher-rate taxpayers^
- Valid Corporation Tax relief (when treated as an allowable expense)
- Significant Income Tax savings
- National Insurance exemptions
- Same high level of family protection, just structured more efficiently.
Contact us to find out if your business qualifies.
^Based on the current higher-rate taxpayer structure. Subject to correct Trust setup and meeting qualifying employment criteria. Trust arrangements may be subject to separate tax charges in specific circumstances. Trusts are not regulated by the Financial Conduct Authority.
If you pay for personal life insurance yourself, the premiums normally come from income on which tax and National Insurance have already been paid. With a Relevant Life Policy, your limited company pays the premiums directly. This changes the financial structure of the cover from a personally funded expense to an employer-funded life insurance benefit.
For eligible company directors, this can make providing the same amount of life insurance significantly more tax-efficient.
For some higher-rate taxpayers, paying for life insurance through an eligible Relevant Life arrangement can result in a significantly lower effective cost compared with paying the same premium personally from post-tax income. With a qualifying Relevant Life Policy, the premiums may be treated as an allowable business expense. This means your company could get Corporation Tax relief, while you could benefit from significant Income Tax and National Insurance savings. You get the exact same family protection, but at an effective cost that could be up to 50%^ lower.
The actual saving will depend on your individual tax position and the circumstances of your company.
^Based on the current higher-rate taxpayer structure. Subject to correct Trust setup and meeting qualifying employment criteria. Trust arrangements may be subject to separate tax charges in specific circumstances. Trusts are not regulated by the Financial Conduct Authority.
Relevant Life Insurance paid by the company may be treated as an allowable business expense for Corporation Tax purposes, provided the arrangement meets the relevant qualifying conditions and is incurred wholly and exclusively for the purposes of the business.
This can reduce the effective cost to the company of providing the cover.
Corporation Tax relief is not automatic and will depend on the circumstances of the business and the arrangement, so appropriate tax advice should be sought where necessary.
Premiums paid by an employer for a qualifying Relevant Life Policy are normally not treated as a benefit in kind for the employee. This means the director or employee would not normally pay Income Tax on the premiums.
Relevant Life premiums are also normally outside the usual employee and employer National Insurance charges that could otherwise arise when remuneration is taken from the company.
For higher-rate taxpayers in particular, this can make Relevant Life Insurance a highly tax-efficient way for a company to provide individual life cover.
Relevant Life Insurance is still life insurance. If you die while covered by the policy, it can provide a lump-sum benefit intended for your chosen beneficiaries.
The key difference isn't necessarily the protection itself – it's how that protection is arranged and paid for.
Instead of paying personally from your post-tax income, an eligible Relevant Life Policy allows your company to fund the cover in a potentially more tax-efficient way.
So you can protect the people who matter to you while potentially reducing the effective cost of doing so.
Who can have Relevant Life insurance?
Relevant Life insurance may be suitable for:
- directors of UK limited companies;
- employees whose employer wants to provide individual life cover;
- directors of small businesses that don't have enough employees for a group life scheme; and
- high earners and higher-rate taxpayers looking for employer-funded life protection.
Relevant Life insurance is an employer-employee arrangement, so it isn't generally available to sole traders for themselves because there is no separate employing company.
Get advice on whether Relevant Life insurance is right for you
If you are a company director currently paying for life insurance personally, it's worth checking whether a Relevant Life policy could provide the protection you need in a more tax-efficient way.
At Essential Insurance, our advisors can explain how Relevant Life insurance works, establish whether it is suitable for your circumstances and compare policies from leading UK insurers.
Already paying for life insurance personally? Contact Essential Insurance to find out whether your company could pay instead.
Answers to our most frequently asked questions
A Relevant Life Policy is an employer-funded life insurance policy designed to provide an individual benefit upon death for an employee, including an eligible company director. It is normally written into a Relevant Life Trust so that any benefit can ultimately be paid to the employee's chosen beneficiaries.
Potentially, yes. If you're an employee or director of a limited company, your company may be able to take out and pay for a Relevant Life Policy on your life, subject to the arrangement meeting the qualifying requirements.
Premiums for a qualifying Relevant Life Policy are normally not treated as a taxable benefit in kind for the employee. This is one of the reasons Relevant Life Insurance can be more tax-efficient than some other methods of providing individual life cover through a company.
Employer premiums paid into a qualifying Relevant Life Policy are normally not subject to employee or employer National Insurance contributions.
Yes. Relevant Life Insurance is commonly used by directors of limited companies who are employees of their company, particularly where they do not have access to a group death-in-service scheme.
A sole trader generally cannot take out Relevant Life Insurance for themselves because the arrangement requires an employer and employee. A sole trader and their business are not separate legal entities in the same way as a limited company and its director/employee.
Traditional Relevant Life Insurance is primarily designed to provide life cover. Some insurers may offer additional benefits or products with different features, but these can have different tax implications and qualifying requirements. Advice should be taken on the specific policy being considered.
A Relevant Life Policy is normally written into a Relevant Life Trust. The trustees hold the policy benefits for the beneficiaries specified under the trust arrangements, rather than the proceeds being paid to the company as a business asset.
Essential Information
Relevant Life insurance is subject to eligibility and qualifying conditions.
Tax treatment depends on individual and company circumstances and may change in the future. Corporation Tax relief is not guaranteed and depends on the arrangement satisfying the relevant requirements. You should seek professional tax advice where appropriate.
Relevant Life policies are normally established under an appropriate Trust. Trust arrangements have legal and tax consequences and may, in certain circumstances, be subject to separate tax charges. Trusts are not regulated by the Financial Conduct Authority.
^The potential saving of up to around 50% is an illustrative effective-cost comparison based on a higher-rate taxpayer and assumes a qualifying Relevant Life arrangement, including applicable Corporation Tax relief. The actual saving will depend on individual circumstances, how income would otherwise be extracted from the company, prevailing tax rates and the tax treatment of the arrangement.
Last reviewed: August 2026 Essential Insurance is an FCA-regulated protection insurance broker providing advised personal and business protection insurance.