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Summary
A Quick Overview of Directors’ Life Insurance
Directors’ life insurance, known as Relevant Life, is a tax-efficient policy arranged via your company to provide a lump sum to your family on death or terminal illness. It can deliver personal protection alongside potential Corporation Tax savings when premiums qualify as allowable business expenses and usually avoid being a taxable benefit-in-kind.
Typically set up in a discretionary trust, the payout generally sits outside your personal estate, often free from Income Tax and Inheritance Tax. However, tax treatment varies based on individual circumstances, remuneration structure, and current legislation. Our FCA-regulated advisers and business insurance experts provide access to market-leading rates and ensure correct structuring to meet HMRC requirements.
What is Directors’ Life Insurance?
Directors’ life insurance (Relevant Life) is a type of life cover arranged through your limited company that can be a tax-efficient way to protect your family, when structured correctly
It offers personal protection, potential Corporation Tax savings, and peace of mind. Set up in trust with our expert business insurance team and FCA‑regulated advisers who can compare competitive rates from a carefully selected panel of UK insurers to find suitable options for your individual circumstances.
Not all insurers offer Relevant Life Insurance products, so we work with a carefully selected panel of UK providers to compare competitive options from a carefully selected panel with the most suitable policies for your circumstances.
Directors’ life insurance vs personal life insurance – what’s the difference?
The main difference is how the policy is set up and paid for. Directors’ life insurance is arranged and funded by the business, whereas personal life insurance is taken out and paid for by you individually.
A relevant life policy can often be more tax-efficient when structured correctly as premiums are generally paid by the company and are not usually treated as a benefit-in-kind, subject to HMRC rules and individual circumstances.
Both provide a payout to your beneficiaries, but directors’ life insurance is specifically designed for directors and employees paid via PAYE through a UK limited company, while personal life insurance is available to individuals regardless of how they are employed.
Who is Eligible for Directors’ Life Insurance?
Relevant Life Insurance is designed specifically for UK resident directors, owner-directors, and employees paid via PAYE through their UK limited companies.
Eligibility can vary by insurer. We will assess your status and advise accordingly.
Limited Company Directors and PAYE Employees
Eligibility criteria, including age limits, vary by insurer. In general, applicants must be employed by a UK limited company and meet the insurer’s underwriting rules.
Small Business Owners
Relevant Life can work well for small limited companies, including owner-managed businesses, where a group life scheme may not be practical.
Contractors
Contractors working through their own limited company and paid via PAYE may be eligible, subject to insurer criteria.
Charities
An employee of a charity can qualify for relevant life insurance. The policy should be written into a trust, and the beneficiary should be a charity or an individual.
Who isn’t Eligible for Directors’ Life Insurance?
Relevant life insurance is designed to cover employees of a business. Some people don’t qualify for this type of life insurance and would need to set up a different type of policy for their life insurance needs. Those not eligible include:
Non-salaried directors
If you are a director of a company, but don’t draw a salary, you don’t qualify for directors life insurance.
Company shareholders
Likewise, shareholders and equity partners who are not employed by the company are ineligible.
Sole traders
Self-employed sole traders cannot have relevant life insurance as they are not employed by a company.
Non-UK residents
Ineligibility also applies to non-UK residents as well as those outside of the age requirements (under 18 / over 75 years of age)
In these cases, a standard personal life insurance policy may be more appropriate.
Why do Directors Choose Relevant Life over Personal Life Insurance?
Potentially Lower Net Costs
Premiums are generally paid by the company rather than from your personal post-tax income, and when structured correctly they are not usually treated as a benefit-in-kind.
Estate Planning Benefits
The policy is typically written in trust, which usually helps keep the payout outside your estate for inheritance tax purposes.
Personal Protection, Not Business Cover
The money goes directly to your family, not into the company.
What does Directors’ Life Insurance Cover?
Directors’ life insurance provides a lump sum payment if the insured person dies during the policy term. The policy is set up by the business and typically written in trust, so the payout goes directly to the chosen beneficiaries.
It is designed to support your family or dependents financially, helping cover things like living costs, outstanding debts, or future expenses. Many policies also include terminal illness cover, subject to the insurer’s terms and definitions.
Why Specialist Advice Matters for Relevant Life Cover
Relevant Life cover can be a highly valuable and tax efficient way for directors and employees to protect their families, but only if it is set up correctly from the start. A business protection specialist can check whether you are eligible, confirm your PAYE status, explain how your remuneration affects the level of cover available, and make sure the policy is written in trust properly so the intended tax treatment and beneficiary structure are in place.
Advice also matters because Relevant Life is often confused with other types of business protection. A specialist can help you understand whether Relevant Life is the right fit, whether Key Person or Shareholder Protection is more appropriate, and whether Executive Income Protection should also be considered alongside it. Getting this right early can help avoid unsuitable cover, tax inefficiencies, and gaps in protection later on.
How does Acceptance Work for Directors’ Life Insurance?
Directors’ Life Insurance applications typically require underwriting and a health assessment as part of the acceptance process. Insurers assess your medical history, current health, lifestyle factors (such as smoking), and family medical background to determine your risk profile. This helps establish your premium and eligibility.
Be prepared to provide medical questionnaires and, in some cases, attend a medical examination or provide access to your medical records. Full disclosure is essential to avoid issues with claims in the future.
This process ensures the policy is tailored appropriately and priced fairly based on individual risk.
3 Simple Steps to Getting Directors’ Life Insurance Through Your Company
You pick the level of cover and budget that feels right, and we handle the application, trust setup and paperwork so your family is protected while you’re employed by the business.
Step 1: Share a few details
Tell us about your company, your role, your income and who you want to protect in a quick, no obligation fact find. We confirm eligibility, explain tax-efficient setup and then we handle trust and paperwork
Step 2: See your tax-efficient options
We compare directors’ life insurance (Relevant Life) quotes from leading UK insurers and show you clear monthly costs and potential company and personal tax advantages.
Step 3: Choose your cover and let us do the rest
You pick the level of cover and budget that feels right, and we handle the application, trust setup and paperwork so your family is protected while you’re employed by the business.
How much does Directors’ Life Insurance Cost?
The cost of directors’ life insurance depends on a small number of key factors that insurers use to assess risk and the level of cover required.
Age plays a role, with premiums typically lower when you are younger and increasing over time. Health and lifestyle are also important, as medical history, current health, and smoking status can all affect the price, with better overall health generally leading to lower premiums.
The level of cover you choose will directly impact cost, with higher payout amounts resulting in higher premiums. Your occupation may also be considered, particularly if it involves a higher level of risk. In addition, the policy term and any added features can influence the overall cost of cover.
Overall, the key points that can affect the costings of your Directors’ Life Insurance are:
- Age
- Health
- Smoker status
- Cover amount
- Policy term
- Occupation
Your remuneration level may also affect your available cover.
How much cover can I get?
Most insurers set a maximum cover amount, often capping the life insurance at around 25-30 times your total remuneration plus salary dividends, but exact limits vary by insurer and underwriting.
- Under 40: up to around 30x total remuneration
- Age 40–49: up to around 25x total remuneration
- Age 50–59: up to around 20x total remuneration
- Age 60+: up to around 15x total remuneration
These are indicative only and vary by insurer
The exact level depends on the insurer’s criteria, as well as your age, health, and the policy term. An adviser can help confirm what level of cover is realistic for your situation.
The Benefits of Directors’ Life Insurance
Tax Efficient
Premiums are usually paid by the business and may be treated as an allowable expense for corporation tax when structured correctly. The policy is generally treated as a benefit in kind, so there is usually no personal tax to pay on the premiums. Any payout is usually free from income tax for beneficiaries and subject to HMRC rules and individual circumstances.
Business-Funded
The company pays for the policy rather than you personally, which can make it a more efficient way to arrange life cover.
Remuneration-based Cover
Cover is often based on your remuneration, which can allow for a higher level of protection compared to some personal policies.
Does Director Life Insurance Cover Critical Illness?
Standard Relevant Life Insurance usually provides life cover with terminal illness inclusion only. If you also want cover for serious illness or loss of income, we can discuss suitable add-ons such as standalone Critical Illness cover or Executive Income Protection. Think of Relevant Life as the foundation, then you can build extra layers if you need them.
For income protection arranged through your company, some insurers may offer cover based on a percentage of total remuneration, subject to provider rules and underwriting, helping to replace much of your income if you cannot work due to illness or injury. Executive Income Protection sits alongside Relevant Life Insurance to provide comprehensive protection.
How is Directors’ Life Insurance Set Up Properly?
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Advice & scoping: We check eligibility, agree the cover amount and term, and confirm who you want to benefit, so your cover is sustainable and tax-efficient for the long term.
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Trust deed: The policy is placed into a discretionary trust from day one, so the tax advantages are secured.
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Underwriting & issue: The company is the policyholder, and the director/employee is the life insured.
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Annual review: We revisit cover as your salary, dividends, loans or family situation changes.
Common mistakes to avoid
What do I need for a Director’s Life Insurance Quote?
To provide a quote quickly, we need:
- Date of birth, smoker status, and health details
- Employment status (PAYE), salary and dividends
- Desired lump sum and policy term
- Names of your beneficiaries for the trust
Smart Add-ons for Directors
Executive Income Protection (EIP): Paid for by the company, usually deductible, not a benefit-in-kind. It protects your income if illness or injury stops you working, and complements a Relevant Life Policy perfectly.
Key Person or Shareholder Protection: Designed to protect the business or ownership structure, not your family. These can be arranged alongside Relevant Life for a full protection package.
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Expert view: Matt Cotter on directors’ life insurance
Matt Cotter is a protection specialist who has expertise across business and personal protection structures.
5 Minute Interview.
“It is the most tax-efficient way for directors to look after their families.”
Think of it as life insurance that your company pays for on your behalf. Instead of you dipping into your own pocket, your limited company picks up the bill. If something happens to you, a lump sum goes straight to your family via a trust — normally tax-free. It’s a really smart way for directors to get personal protection through the business.
No. When it’s set up correctly as a Relevant Life Policy, it isn’t treated like a perk, so there’s no P11D form or extra tax bill to worry about. The premiums are simply a company expense — not a benefit you’re taxed on.
Yes, in most cases. Because the cover is there to protect an employee or director, the cost is usually an allowable business expense, which means it can reduce your corporation tax. Every business is different, so we’ll check that for you — but nine times out of ten, it’s tax-efficient.
It’s designed for people who are on the payroll of a limited company — so directors and employees paid via PAYE. If you’re a sole trader or part of an LLP without PAYE, it usually won’t fit. Also worth knowing: this is about looking after your family, not the company, so it doesn’t replace Key Person or Shareholder Protection.
The trust is the secret sauce. Without it, the payout could get tangled in your estate and potentially face inheritance tax. With it, the money usually goes straight to your chosen people, tax-free, and quickly. We’ll set up the discretionary trust as part of the advice process so you don’t have to stress about the paperwork.
No — Relevant Life is strictly life and terminal illness cover. If you also want protection against things like heart attacks, strokes, or cancer, we’d add Critical Illness cover or Executive Income Protection alongside it. Think of Relevant Life as the foundation, then you can build extra layers if you need them.
Key Person is all about protecting the business — making sure the company survives if a key player can’t work. Directors’ Life Insurance is personal: it’s about making sure your family is financially secure if something happens to you. Two different risks, two different policies.
When it’s set up correctly — yes, in almost every case. The money is paid into a trust, so it doesn’t form part of your taxable estate. That means your family gets the money they need, without a big tax bite.
You’ve got options. You can normally transfer the policy to your new employer, or take it on personally and keep the cover going. The way the tax works may change, but the cover itself doesn’t have to stop just because your business circumstances do.
Most directors combine Relevant Life with Executive Income Protection (so the company covers your sick pay if you can’t work), and sometimes Critical Illness too. That way you’ve covered life, illness, and income. For the business itself, you’d look separately at Key Person or Shareholder Protection.
Directors' Life Insurance FAQs
What is Directors Life Insurance and how does it differ from Personal Life Insurance?
Directors Life Insurance premiums are considered a business expense and are tax-deductible, reducing corporation tax. The payout is usually tax-free to beneficiaries under a trust, helping avoid inheritance tax.
Who is eligible for Directors Life Insurance?
The premium for Directors Life Insurance is typically paid by the company, not the director personally. This makes it a tax-efficient option for life cover, as it reduces the corporation tax liability.
How is the benefit from Directors Life Insurance paid out?
Is Directors Life Insurance considered a benefit-in-kind?
If you leave the company, you may transfer the policy to a new employer or take it on personally. However, the tax treatment may differ once removed from the original company structure.
No, it’s not necessary to die during the working day, or even for your death to be related to your job. The only requirement is that you are employed by the company at the time of your death.
Unfortunately no, critical illness is not usually covered by directors life insurance. There are other policies you could look into, such as directors’ income protection insurance.
No, having relevant life insurance isn’t counted towards your pension allowance and has no impact on your pension.
There are several options in this eventuality, but typically the policy can be suspended or transferred.
I have more questions
We are here to help. Contact us and our highly qualified (and friendly) team will answer all your questions about directors’ life insurance or any other queries you may have.