Relevant Life Plan | Spectrum Financial Advice

What is a Relevant Life Plan?

A Relevant Life Plan or Relevant Life Insurance is a tax efficient life insurance policy for business owners, directors and other employees of the business that offers death-in-service benefits. These policies are ideal for smaller companies and remove the requirement to take out group protection cover. Significant Illness Insurance can also be added to the policy as an optional extra.

If the person covered on the policy passes away, the policy will pay out a pre agreed tax-free lump sum of money to the employee’s chosen beneficiary or family.

If significant illness insurance is included, the pay-out can be paid directly to the employee or their chosen beneficiary.

The premiums are paid by your business, usually as a tax deductible expense and are not usually classed as a benefit in kind.

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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Tailored Cover

Spectrum FA will tailor the cover to fit your exact requirements, so you only receive cover that suits your needs.

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Spectrum FA will advise on insurance policies from the leading names in the industry, so you can be sure you are covered.

Expert Advice

Spectrum FA have been giving advice to our clients for many years, so you know you will receive honest, impartial advice.

The Key Features

Employers can retain complete control over their Relevant Life Plans by choosing the elements they wish to have, such as;

  • Choose between level cover – where the amount of cover remains the same throughout the policy – or increasing cover – where the cover amount increases to help protect against the future effects of inflation.
  • Add Significant Illness Cover to the standard Life Policy Cover, in which case the policy will pay out should the named individual be diagnosed with one of the specified significant illnesses.
  • Opt for a continuation benefit, which allows the individual named on the insurance to transfer the policy should they change employers, or they wish to transfer the policy to their personal name.

With Spectrum Financial Advice, employers can tailor their plans to exactly match the needs of their business and their staff, ensuring a truly bespoke service. Spectrum FA will advise employers through all the available options and recommend suitable plans, to ensure the business achieves the correct policy for them.

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What are the Tax Benefits of a Relevant Life Plan?

The premiums are viewed as an allowable tax deductible business expense by HMRC. Therefore, all premiums paid by the employer will qualify for corporation tax relief. In addition, if the plan is held in a discretionary trust for the beneficiaries, inheritance tax is avoided.

The benefits are paid out tax free to the employee or their chosen beneficiary(ies) and the premiums paid by the employer are not treated as employee income or classed as a P11D benefit in kind. There, the employee will not have to pay income tax or national insurance on the premiums.

It is worth noting that any pay-out does not count towards the annual or lifetime pensions allowance for the employee, so Relevant Life Plans are attractive for high earners.

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

How does Relevant Life Cover differ from other Life Insurance?

This type of insurance is very similar to most other types of life insurance policies and instead of offering a group life scheme, this is a tax-efficient way for a business to cover employees, including directors against terminal illness or death on an individual basis. In addition, in certain circumstances, cover can be increased without the need for additional underwriting.

Who is eligible for a Relevant Life Plan?

Any employee of a business can have Relevant Life Cover, including company directors. The payout from the Relevant Life Cover /  death-in-service is not included as part of their lifetime allowance. Partners in Limited Liability Partnerships and sole traders are not eligible for Relevant Life Insurance.

How much does a Relevant Life Policy cost?

Premiums depend on the following factors:

  • Age of the individual to be insured
  • Smoker status
  • Medical history & current lifestyle
  • Level or amount of cover (and whether this cover will remain level or increase over time)
  • Term or length of the policy
  • Which, if any, other add-ons/optional extras are selected, including significant illness insurance

Insurance premiums also vary between policies/providers, so it is important you receive expert advice to ensure you obtain the most suitable policy for your specific needs. To learn more, please contact our experts today.

Who can take out Relevant Life Insurance?

Relevant Life policies are taken out by a business on behalf of one or more of their employees, including directors. The employee will choose their beneficiary on the policy, who will receive a financial payout if the employee is diagnosed with a terminal illness or dies. Significant Illness Cover can also be added to the policy.

Who receives a Relevant Life Policy’s benefit (Pay-Out)?

Relevant Life Insurance is designed to protect the insured employees’ families in the event of an death or significant illness (if added) and as such, insured employees will have the opportunity to name their chosen beneficiaries. The lump sum benefit is paid out in the form of a cash sum if the person covered dies.

Policies must, however, be issued under trust (from the start of the plan) and the named trustees on the plan will assist with any claim and also arrange the payment to the named beneficiary(ies). In the event of the insured individual passing away, payment can be made to the named beneficiary(ies) and in the event of a significant illness, payment can be made to the beneficiary(ies) or the employee can decide to retain the significant illness benefit. Beneficiaries and trustees can be amended or changed at a later date.

Spectrum Financial Advice are able to recommend the most suitable plan and will also arrange for the policy to be written / placed in the correct trust, free of charge, as part of our service. Learn more.

Why should I take out a Relevant Life Plan?

Quite simply it is a tax efficient life insurance policy, meaning additional income tax and national insurance contributions are not payable, with an option to add employee significant illness cover. The policy is taken out by a business on behalf of one or more of their employees, including directors, and provides cover for the duration of the policy with the company.

More and more in today’s competitive job market, individuals are turning to their employers to provide such basics as life insurance as part of a package of benefits additional to their basic salary. A Relevant Life policy is the perfect way for businesses to offer their key employees a comprehensive but affordable life insurance policy, which is part of a company benefit scheme.

If Significant Illness Cover is added, what illnesses will be covered?

There are a number of significant illnesses that are covered under the terms and conditions, including, for example:

  • Stroke, kidney failure & major heart attacks
  • Various specific cancers (these cancers will be defined within any given policy’s terms & conditions)
  • Major organ transplants
  • Benign brain tumour
  • Brain injury due to anoxia or hypoxia
  • Creutzfeldt-Jakob disease
  • Dementia
  • Encephalitis
  • Liver failure
  • Multiple sclerosis
  • Motor neurone disease
  • Parkinson’s disease
  • Pulmonary arterial hypertension
  • Respiratory failure
  • Third degree burns

Do you wish to add significant illness cover to your employees’ relevant life plans? For expert advice/guidance concerning this question and for more detailed information on the conditions/illnesses that may be covered, please contact our team of specialists today.

Why use Spectrum FA to arrange Relevant Life Cover?

Spectrum FA have arranged plans for many different types and sizes of businesses.

Being an independent financial adviser, we have access to the leading insurance providers in the market, at competitive premiums. 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 professional advice or service and you will speak directly to an expert, who is regulated by the Financial Conduct Authority, who will guide you through the process and handle all the paperwork on your behalf.

To find out more about how we can help your business to provide Relevant Life Plans for your employees, please get in touch with us today to arrange a free no obligation review. You can contact us via the contact form on the website, by email at, or via phone on 01279 315 013.

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