Life Insurance for Company Directors | Spectrum Financial Advice

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Protecting your business & family against the impact of a company director’s unexpected death.

As a business owner, there are a number of tax-efficient life insurance policies available to you. Policies can be paid for through the business, rather than you having to pay for them personally, providing significant savings and financial benefits for both employer and the employee.

These policies are offered by various insurers, and choosing the best one will depend on your circumstances, what you are looking to achieve, and who you wish to protect. Many people decide to go with HMRC-approved policies, which can be claimed as a tax-deductible business expense, making them even more attractive for businesses.

You are able to protect the shares of the business, the profits of the business or your family and loved ones. Certain policies and premiums can be paid by the business as a tax-deductible business expense. This allows business owners to provide coverage to mitigate the risk of financial troubles following the death of a director.

You also have the option of deciding if you want the cash lump sum payout from the life insurance policy to be paid into the business or outside of the business, to a co-shareholder or your family and loved ones. The unexpected death of a company director could have a range of detrimental effects on a business and family.

For example, shares owned by the deceased individual may be inherited by their next of kin, with little or no interest in, or knowledge of the running of your business. If these shares are sold to competitors, this could result in you having to work with undesired owners. In order to prevent something like this from happening, considering a life insurance policy with a suitable payout can help maintain stability in the company.

Consulting with a knowledgeable adviser about life insurance coverage can help identify the right policy to protect both the business and the family in case of unforeseen events, while considering the salary of the policyholder and possible tax benefits.

Contact Spectrum Financial Advice today for a fee-free, no obligation review to find out how easy it could be to protect and secure your future. Our team will help you find a suitable policy with a competitive premium.

To speak with an expert, please get in touch.

Please also take a look at our frequently asked questions (FAQs) towards the end of the page.

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Competitive Premiums

With our access to the leading insurance providers in the market, Spectrum FA can source competitive insurance premiums.

Bespoke Service

Spectrum FA provide personalised advice tailored to your particular business requirements. Contact us today for a Free, no-obligation quote with a specialist advisor for Director Life Insurance. We will also assist you and / or your family in the event of a claim.

Expert Advice on Company Director Life Insurance 

In addition, commercial loans (business mortgages, commercial development loans, etc.) are often secured against company directors, managers or other key personnel. Should one of these guarantors unexpectedly die, your company may have difficulties repaying such loans in full.

Life Insurance cover for Limited Company Directors alleviates these risks by providing a cash lump sum upon the insured individual’s death or terminal illness. This lump sum payment can then be used to either pay off commercial debts or allow remaining shareholders to buy the shares owned by the deceased person immediately and without the stress of having to find the necessary financial resources. You also have the option to ensure funds can be paid to your family, so they can continue their lifestyle and standard of living, if you are no longer around.

Either way, Life Insurance for Company Directors could enable remaining partners/shareholders to retain control of the business to ensure it can continue running smoothly or you can ensure your family are protected.

Depending on the circumstances of you and your business, Spectrum Financial Advice will advise on suitable protection plans and will recommend the most appropriate policies for your needs.

For further information on some of the options available to you as a business owner and director, please follow the links below:

To speak with an expert, please get in touch.

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We have access to the leading insurance providers in the market, which allows us to recommend the most suitable policies based on your individual circumstances.

Our expert advisers can guide anyone, from business owners to individuals or families and dependants, to find the financial protection they need, offering peace of mind with tailored solutions.

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View some of our frequently asked questions that some of our customers have asked.

Can I Pay For Life Insurance Through My Business?

Yes. As a business owner or Director of a limited company you are able to pay for Life Insurance through your business, rather than having to pay for cover from your personal bank account. This offers substantial tax savings for contractors and employees, while providing peace of mind for their families. Policies will also pay out in the event of a terminal illness, where the individual insured has less than 12 months to live.

There are various company Life Insurance options available to you and depending on your individual circumstances, we will be able to explain the most suitable option and put this cover in place for you.

Is Directors' Life Insurance A Benefit In Kind?

Certain policies, such as Relevant Life Insurance Policy, often known as Life Insurance for Directors, isn’t a P11D benefit in kind for the employee. Therefore, it won’t affect your national insurance contributions or income tax. The company paying the premiums won’t need to pay employer national insurance contributions either.

The policy will be placed in a suitable trust from the start of the plan and you will be able to name your chosen beneficiaries. The money will then be paid to your chosen beneficiary, as a single tax free lump sum, in the event of your death. We will set up the trust, free of charge, as part of the service.

There will also be no impact to your pension lifetime allowance.

Is Directors' Life Cover Tax Deductible?

If a policy is set up as Relevant Life Cover, the answer is yes. For Directors Life Insurance, your company will pay the monthly premiums, which are usually viewed as reasonable and allowable business expenses. Therefore, they will they qualify for corporation tax relief at 19%-25%, depending on annual profits. It is a tax-efficient way for business owners to arrange their personal life insurance through their own limited company.

As a Relevant Life Insurance Policy is placed in a discretionary trust, the proceeds will be tax free and will not be liable to inheritance tax as it does not form part of the estate.

Relevant Life Plans are not available to sole traders, partners of a Partnership or equity members of a Limited Liability Partnership, however, it is available to their employees.

Insurers will usually allow you to cover up to 30 times of your total remuneration (depending on age), which can include both PAYE and dividends.

How Much Does Director Life Insurance Cost?

Policy premiums for Director’s Life Insurance will depend on the following factors:

  • Age of the person to be insured
  • Medical history and current lifestyle
  • Smoker status
  • The amount of cover you wish to be insured for (sum insured)
  • Term or length of time you wish to be covered
  • Which, if any, optional extras or add-ons are to be included on the life policy

Premiums will also vary between different policies and also between the different providers in the market, so it is important to obtain expert advice.

Contact us today to find out more.


Which Providers Offer Director Life Insurance?

There are many major insurance providers that offer this type of cover, including, AIG, Aviva, L&G, LV, Royal London, Zurich, plus many more.

It’s important to speak with an expert who has access to the whole of the market, as each provider will offer the cover at a different price and they may also provide slightly different ‘added’ benefits.

Please contact us for a free no obligation quote.

Can I Include Critical Illness Cover For Director Life Insurance?

For a Relevant Life Policy, unfortunately critical illness cover cannot be included as HMRC haven’t approved this.

As mentioned earlier, for business owners, there are many life insurance, critical illness and income protection options that are available to you.

Please get in touch with our expert team and we can explain your options and also answer any questions you may have.

How Can Spectrum FA Help With Director’s Life Insurance?

Spectrum FA have assisted many directors with their Life Insurance over the years as this is an area we specialise in.

We provide expert regulated advice and will tailor the cover to match the circumstances of you and your business. We do not charge you a fee for our advice or service and you will speak directly to an FCA regulated full qualified expert who will guide you through the process from start to finish and handle all the paperwork on your behalf.

To find out more about the options available to you, or to arrange your free no-obligation review, please use our online contact form or email: or call us on 01279 315 013.


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