Relevant Life Insurance
Relevant life insurance is a tax-efficient way for employers to provide a death-in-service benefit to directors and employees. The premiums are paid by the company, treated as a business expense, and the payout goes directly to the employee’s family — free of income tax and, when written correctly, free of inheritance tax too.
Why relevant life is one of the most tax-efficient protection products available
For company directors and business owners in particular, relevant life is often significantly cheaper than paying for personal life insurance from post-tax income. The company pays the premium, claims corporation tax relief, and the employee’s family receives the benefit — without it forming part of the estate.
Trust Setup — Essential and Included
A relevant life policy must be written in a discretionary trust to qualify for the tax advantages. We arrange the trust as standard for every relevant life client — at no additional cost. Without the trust, the payout could form part of the estate and lose its inheritance tax exemption.
Find out about our trust serviceWhat is relevant life insurance and how does it work?
Relevant life insurance is an individually written life insurance policy taken out by an employer on the life of an employee or director. It is set up under a discretionary trust, with the employee’s family or dependants as beneficiaries.
If the employee dies during the policy term, the trust pays the lump sum directly to the beneficiaries — bypassing the estate, avoiding probate, and free of inheritance tax. The premiums are paid by the employer and qualify as an allowable business expense for corporation tax purposes. They are also exempt from National Insurance contributions for both employer and employee.
It is not a group scheme — each policy is written individually, which means the sum assured and term can be tailored precisely to the individual’s needs.
- Paid by the employer as a business expense
- Corporation tax relief on premiums
- No employer or employee NI contributions
- Payout is free of income tax
- Outside the estate when written in trust
- Individually written — not a group scheme
- Available to employees and directors
Relevant life vs personal life insurance — the tax difference
| Feature | Relevant life (employer-paid) | Personal life insurance (post-tax) |
|---|---|---|
| Who pays the premium | The employer / company | The individual, from net income |
| Corporation tax relief | Yes — allowable business expense | No |
| National Insurance | No NI for employer or employee | N/A — paid from post-tax income |
| Income tax on payout | None | None |
| Inheritance tax on payout | Outside estate when in trust | Outside estate when in trust |
| Effective cost | Significantly lower after tax relief | Higher — no tax relief on premiums |
Who is relevant life insurance suitable for?
| Who | Why relevant life makes sense |
|---|---|
| Company directors | Pay premiums through the company rather than from post-tax personal income — a significant tax saving over the policy term |
| Small business owners | Provide a meaningful death-in-service benefit to key employees without the cost and complexity of a group scheme |
| Employees of any size business | An individually written policy that travels with the individual and is not tied to continued employment with one firm |
| High earners | Particularly tax-efficient for those in higher or additional rate tax bands, where the saving on personal premiums is greatest |
| Those without access to group schemes | Sole directors and small company employees who cannot access employer group life schemes can still get death-in-service cover this way |
How to arrange relevant life insurance through That’s Family Finance
We keep the process straightforward. Here is what to expect.
Initial conversation
We start with a no-obligation chat to understand the individual’s situation — their role, income, family, and what level of cover makes sense. No forms, no pressure.
We research the market
As a whole-of-market protection broker, we search across every insurer to find the right policy — comparing sum assured options, terms, and premiums.
We talk you through your options
We present the options clearly, explain the tax treatment, and answer any questions. You decide — in your own time, with no pressure.
We handle the application and trust
We manage the application and set up the discretionary trust — ensuring the policy qualifies for the tax advantages from day one.
Why directors and business owners choose That’s Family Finance
Your relevant life insurance questions answered
What is relevant life insurance?
Who can have a relevant life policy?
How much can be covered under a relevant life policy?
Does a relevant life policy have to be written in trust?
What happens to the policy if the employee leaves the company?
Is relevant life insurance the same as group life insurance?
Can relevant life cover critical illness?
Explore our other protection services
Qualifications: Level 4 Diploma in Financial Advice · Level 3 Certificate in Mortgages & Protection · Level 3 Certificate in Equity Release.
FCA Individual Reference Number: BXT01420 · Last reviewed: August 2026.