In the dynamic world of modern business, the ability to attract and retain premier talent stands as a top priority for UK businesses. Offering attractive employee benefits packages is a key strategy to achieve this goal. This insurance option offers a protection lifeline for employees and their loved ones, ensuring peace of mind in uncertain times. As businesses navigate the complex financial planning web, understanding the benefits of relative life cover becomes necessary. UK specialists in relevant life cover can help businesses understand the advantages of this tax-efficient insurance solution.

What is Relevant Life Cover?

Relevant life cover is a life insurance policy taken out by a business on the life of an employee. In the unfortunate event of the employee’s death or terminal illness diagnosis, the policy pays out a tax-free lump sum to a pre-determined beneficiary, typically the employee’s family. The policy is written under a trust, ensuring the benefit bypasses the employee’s estate and reduces potential Inheritance Tax implications.

How does Relevant Life Insurance differ from Other Insurance Policies?

There are several key distinctions between relevant life insurance and other insurance policies:

  • Policyholder: Traditional life insurance policies are typically owned by the individual getting insured. In relevant life policy, the employer takes out the policy on the employee’s life.
  • Tax Benefits: Relevant life insurance offers significant tax advantages for businesses. Premiums paid by the employer are treated as a business expense, allowing them to be offset against corporation tax. Additionally, the death benefit is paid out tax-free to the beneficiary.
  • Ownership and Control: While the employer holds the policy, the employee typically has the right to nominate their beneficiary. Additionally, the employee may have the option to increase or decrease their level of coverage, subject to employer approval.

Benefits of Relevant Life Insurance Policy for UK Businesses

Benefits for Businesses:

There are several compelling reasons why UK businesses should consider implementing a relevant life cover policy:

  1. Enhanced Employee Benefits Package: Offering relevant life policy demonstrates a commitment to employee well-being and financial security. This can be a significant advantage when attracting and retaining top talent, especially in a competitive market.
  2. Tax Efficiency: Premiums paid by the business for relevant life insurance are typically tax-deductible as a business expense. This could result in substantial cost reductions for the organization. Furthermore, the death benefit payout is typically tax-free for the beneficiary.
  3. Improved Employee Morale: Knowing their families are financially protected in case of their death can provide employees with peace of mind. This can lead to improved morale, increased productivity, and reduced absenteeism.
  4. Business Continuity: The unexpected death of a key employee can disrupt business operations. The payout from a relevant life policy can help the company cover the costs of recruitment and training a replacement, minimizing disruption.
  5. Death-in-Service Benefit: Relevant life cover can be used to provide a death-in-service benefit to employees. This is often more generous than the statutory minimum payout required by law, further demonstrating the company’s commitment to its workforce.

Benefits for Employees:

Employees also benefit significantly from relevant life cover:

  1. Financial Security for Loved Ones: In the event of the employee’s death, their family will receive a tax-free lump sum to help cover living expenses, mortgage payments, and other financial obligations.
  2. Peace of Mind: Knowing their families are financially protected can provide employees with peace of mind, allowing them to focus on their work and personal lives.
  3. Improved Perception of Employer: Employees who are offered relevant life insurance are likely to view their employer more favorably, fostering a stronger sense of loyalty and trust.

Key Considerations for UK Businesses

Before implementing a relevant life cover policy, UK businesses should consider several factors:

  • Eligibility: Not all employees are eligible for relevant life insurance. Age and salary limits typically exist, and some pre-existing medical conditions may affect eligibility.
  • Cost: The cost of a relevant life insurance policy will vary depending on the level of coverage, the employee’s age and health, and the chosen provider. UK specialists in relevant life policy can help businesses compare quotes and find the most cost-effective solution.
  • Trust Considerations: Relevant life policy must be written into a trust to ensure the death benefit is paid to the intended beneficiary and remains tax-efficient. Specialist advice should be sought to ensure the trust is set up correctly.


Relevant life cover offers a win-win situation for both UK businesses and their employees.  Businesses benefit from improved employee morale, tax efficiency, and business continuity planning.  Employees gain peace of mind knowing their families are financially protected.  By partnering with a UK specialist in relevant life insurance, businesses can implement a cost-effective solution that delivers significant benefits for all stakeholders.