Relevant Life Cover

Protecting its key people should be an integral part of any company’s business plan. Many businesses already protect a lot of the important things that keep them running smoothly, such as property, vehicles, plant and stock. So it makes sense to insure your most valuable assets: your staff and business owners.

As well as protecting your business’s finances from the loss of a key employee or business owner, you may want to provide some financial protection for their family as well, so that they do not suffer financial hardship in the event of the individual’s death.

Relevant life cover will enable you to arrange tax-efficient provision for the payment of a lump sum to the family of an employee in the event of their death while employed by you.

• It is a life insurance policy with a fixed term, taken out and paid for by an employer, with the life assured being the employee. This means that a partnership, limited liability partnership or sole trader can’t arrange it for any of the business owners, but can do so for any key employees (if there are any).
• It provides a lump sum, paid when the employee either dies or is diagnosed with a terminal illness while still employed by the company, and before age 75.
• It doesn’t provide any other benefits (e.g. critical illness cover) and does not acquire a surrender value at any time.
• The employer sets it up under a special Relevant Life Policy Trust.
• It is designed to meet the criteria for a “single life” Relevant Life Policy as detailed in the Income Tax (Earnings and Pensions) Act 2003.