A tracker mortgage is very similar to a variable rate mortgage with the difference being that the interest rates follow those set by the Bank of England, rather than by the lender itself. As with a variable rate mortgage, a tracker mortgage has the same pros and cons, with potential savings as well as the possibility of increased repayments. Which one you decide to go for depends on your personal circumstances and financial situation. The safest bet is a fixed rate mortgage, since keeping an eye on interest rates for first time buyers takes time and effort, and you have better things to think about! Though feel free to discuss your options with a mortgage advisor as, depending on your situation, other types might work better for you.
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Summary
How to Get Low-Cost, Tax-Efficient Relevant Life Insurance
Relevant Life Insurance is a company-paid life policy for an employee or director. It pays a lump sum to your chosen beneficiaries (via a trust) if you die during the term. Premiums are usually paid by the business and, with the right setup, can be tax-efficient. We explain how it works, compare costs with personal life cover, and set up the policy and trust in plain English. FCA-regulated advice from friendly specialists. Rated 5★ with 2,500+ Trustpilot reviews and 5/5 on Google.
What you’ll get (quick overview)
Fast quotes for Relevant Life Insurance in minutes.
Tax-efficiency explained: potential corporation tax relief (if “wholly and exclusively” for business), usually no employee National Insurance, and typically not a P11D benefit in kind.
Clear comparison: company-paid Relevant Life vs personally paid life insurance.
Trust made simple: we help set up the policy in trust so benefits reach the right people quickly.
Cover options: level or decreasing term; waiver of premium where available. (Critical illness is usually separate.)
Underwriting help: we liaise with insurers; medicals or GP reports only if requested.
When to speak to an adviser
- You’re a limited-company director on PAYE and want company-paid protection.
- You have personal life cover already and want a cost and tax comparison.
- You need higher cover for family, mortgage or business responsibilities.
- You have health conditions or a previous decline and want guidance.
- You’re unsure about trustees, beneficiaries, term length or cover amount.
Trust & transparency
CeMAP-qualified advisers. FCA-regulated. UK-wide support. Rated 5★ with 2,500+ Trustpilot reviews and 5/5 on Google.
Tax treatment depends on your personal and company circumstances and may change.
As with all insurance, terms, conditions and exclusions apply. If you stop paying premiums, your cover will end.
Relevant Life Insurance – Everything You Need To Know
Are you a business owner looking to provide your employees with life cover? Business insurance can be a complex and confusing subject and there are lots of options to consider. You may have questions, such as:
- How does it work and is it right for my business?
- Is it different from Group Life Insurance?
- How does it benefit my employees?
- Is it tax-efficient?
- What if I’m a sole trader or contractor?
Don’t worry – we will cover all these questions and more and give you all the information you need on the subject.
15% 15% year-on-year increase in the number of policies taken out by SMEs Attract Compete with larger companies in attracting and retaining top talent.What Is Relevant Life Insurance?
It is a valuable death-in-service benefit you can offer your employees as part of their benefits package.
This doesn’t cost your employee anything – your business applies for and pays for the policy.
It works in a similar way to a Group Life Insurance policy and has the purpose of providing a lump-sum payout if your employee dies while being employed by your company.
The payment is a tax-free lump sum made to the beneficiaries of your employee and is typically a multiple of your employee’s wages (usually two to four times their annual salary).
Relevant Life Insurance vs Life Insurance
Both relevant and personal life insurance policies fulfil the purpose of providing a lump sum payment in the event of a death. The main difference between these two forms of life insurance is that Relevant Life Insurance is set up by a business and is applicable in an employer-employee situation. Personal Life Insurance is set up by the individual and is subject to taxation.
So, what are some of the pros and cons of a relevant policy?
Pros
This type of life insurance is a tax-deductable, allowable business expense, so the premiums can be significantly lower than for personal life insurance as income tax, corporation tax and National Insurance contributions are not applicable.
A relevant policy is more tax efficient than an individual life insurance policy as it is not subject to taxation. Also, in the event of a payout, the payment that the beneficiary receives is also in the form of a tax-free lump sum.
Life insurance is a great benefit for your employee and demonstrates that you value them – this can make you an attractive employer when people come to weigh their job options. Because your business takes out and pays for the policy it doesn’t cost your employee a penny.
If you own a small business with fewer than five employees you may not be eligible for a group life insurance policy; Relevant Life Insurance, however, is available for smaller companies, has similar features and is similarly assessed.
A Relevant Life policy covers employees, which includes company directors, partners and high earning executives who draw a salary from the company.
Cons
A relevant policy only covers employees only while they work for you whereas a traditional life insurance policy is for life.
It’s important to let employees know how much money their beneficiaries would receive if your employee were to die as they may want to take out a separate life insurance policy, in addition to the life insurance that you provide.
A relevant policy is more tax efficient than an individual life insurance policy as it is not subject to taxation. Also, in the event of a payout, the payment that the beneficiary receives is also in the form of a tax-free lump sum.
If you are a contractor or self-employed but don’t have a limited company then Relevant life Insurance isn’t available as an option.
How Much Does Relevant Life Insurance Cost?
There are several factors which will affect the cost of your premiums, such as:
- How many employees do you have?
The number of staff you want to cover, as well as the amount you want to pay out in the event of a death will affect the price of your payments. Although choosing a higher payout amount will raise your premiums, increasing the number of employees you cover will actually reduce the cost per person because the insurance company will be able to spread the risk.
- What is the average age of your employees?
Your premium will increase if your average employee age is higher. This is based on the risk assessment that as we age we are more likely to die. If the average age of your employees is lower then the premiums will be lower accordingly.
- What is your employees’ medical history?
Some insurers may want this information, depending on the policy you require. Producing this information may increase your premiums as well as the amount of paperwork you need to submit.
- How risky is your industry?
Some jobs are more dangerous than others and this will affect your premiums too. However, if only some of your staff are employed in higher-risk positions and the majority work in a low-risk environment, such as an office, then this will be taken into account by the insurance company as the overall risk is spread.
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How Much Does Relevant Life Insurance Cost?
There are several factors which will affect the cost of your premiums, such as:
- How many employees do you have?
The number of staff you want to cover, as well as the amount you want to pay out in the event of a death will affect the price of your payments. Although choosing a higher payout amount will raise your premiums, increasing the number of employees you cover will actually reduce the cost per person because the insurance company will be able to spread the risk.
- What is the average age of your employees?
Your premium will increase if your average employee age is higher. This is based on the risk assessment that as we age we are more likely to die. If the average age of your employees is lower then the premiums will be lower accordingly.
- What is your employees’ medical history?
Some insurers may want this information, depending on the policy you require. Producing this information may increase your premiums as well as the amount of paperwork you need to submit.
- How risky is your industry?
Some jobs are more dangerous than others and this will affect your premiums too. However, if only some of your staff are employed in higher-risk positions and the majority work in a low-risk environment, such as an office, then this will be taken into account by the insurance company as the overall risk is spread.
This type of insurance is well suited to company directors, executives and high-salaried staff and can be very tax-efficient. If you are a director of a limited company then your company can take out a life insurance policy for you, instead of, or in addition to, an individual policy. Employees (including company directors) won’t have to pay National Insurance contributions or income tax. The policy is set up and paid for by the company and isn’t considered a ‘benefit in kind’ as, for example, a health insurance policy would. The payout is not subject to taxation. The family of the employee receives a tax-free lump sum in the event of a death that occurs while being employed by the company. In addition, the payment is not subject to probate, which means that the beneficiaries receive the funds without any further delay. Understanding Relevant Life Insurance for Directors Tax Treatment
Tax Implications for Your Business
This type of life insurance offers benefits to both the employees and the company itself.
- Corporation tax
Premiums are considered a business expense and are thus tax deductible. Your company can apply for corporation tax relief on your insurance payments.
- National Insurance
You also won’t need to pay National Insurance contributions on your premiums. This also means less paperwork for your business.
It’s advisable to get professional advice from your accountant in order to get the most out of your tax benefits. It is also important to be aware of the conditions needed to take out a life insurance policy for your employees.
Relevant Life Insurance Policy – What Conditions Are Needed?
There are some requirements and rules that must be followed. Although it is tax-efficient, a life insurance policy cannot be used for the purpose of tax avoidance.
- The policy is for life cover only. Other forms of cover such as disability or illness cover are not part of the policy.
- The maximum age is 75 years – individuals must be of legal working age of 75 or under.
- The policy doesn’t have a cash surrender value.
- The lump sum payment must be paid to a person, trust or a charity so as to qualify for tax relief. The policy is designed to make a tax-free lump sum payment to the beneficiaries of the employee.The payment cannot be made to a limited company.
Before getting a relevant life insurance online quote it’s a good idea to do a relevant life insurance comparison. Shopping around is recommended as policies, terms and prices can vary. When you compare relevant life insurance policies, be sure to compare coverage – for example £100,000 – to get an accurate comparison. Getting free advice from an expert can help you to compare life insurance policies, narrow down your choices and select the right policy for your needs. How To Get a Relevant Life Insurance Quote
Summary
Relevant Life Insurance is a type of life insurance that a company takes out on behalf of its employees. The employee doesn’t have to pay into the policy and the policy is valid as long as they are employed by the company. The company pays the premiums.
In the event of the death or terminal illness of the employee, a tax-free lump sum is made to the employee’s beneficiary.
The benefits to the company are that this type of policy is an allowable business expense and a tax-deductable way of providing your staff with a death-in-service benefit.
FAQ
Generally, yes, but the policy will also cover an employee who receives a terminal illness diagnosis and has been given less than a year to live.
No, the policy covers employees who currently work for the company, but the death needn’t occur while at work.
If you are self-employed, a sole trader or a contractor you won’t be able to take out this type of life insurance. You will need to have a limited company or an LLP (limited liability partnership) to qualify.