A Relevant Life plan offers a cost-effective way for an employer to arrange life cover on the life of an employee (or director), with the benefit payable to the employee's family or financial dependant.

Premiums are paid, and the policy is owned, by the employer.

Read more about Relevant Life on our guide.

Relevant Life is payable on death or an earlier diagnosis of a Terminal Illness (12 months or less to live). There is an option to include an amount payable on diagnosis of a serious illness such as cancer, heart attack or Stroke etc.

No, Relevant life plans are non-registered arrangements. The premiums paid by an employer wouldn’t constitute a taxable benefit in kind, as the policy will purely be providing retirement (in the form of terminal illness cover) or death benefits

A relevant life policy can not be used for business loan cover, business continuity or business succession planning.

Any employee or director of a limited company, or an employee of a partnership, charity or a sole trader. However, sole traders or equity partners themselves are not eligible for a Relevant Life policy.

The claim proceeds won’t be subject to income tax, or corporation tax. The policy will be held in a Discretionary Trust, therefore there will be no inheritance tax (IHT) for the estate to pay on death, but, like all non-pension discretionary trusts, the trust itself can be subject to periodic and exit charges.

The trustees will administer the trust on the behalf of the beneficiaries. The trustees can be other shareholders/directors of the business, or friends/family members. The beneficiaries would typically be your dependants E.g wife and children.

All insurers have limits on the amount of cover you can have, this is usually based on your income from the business and your current age, an example is as follows:

Up to age 35: 30 times salary Ages 36-50: 25 times salary Ages 51-60: 20 times salary Ages 61+: 15 times salary

Income could include regular bonuses, commission, overtime and P11D benefits. In the case of a shareholder/director, dividends are taken into account. There are some Insurers that will only apply these limits when you are looking at a cover amount in excess of £1,000,000.

Some insurers will provide cover up to aged 75.