A guide to Relevant Life Cover

Relevant Life Cover in an insurance policy that allows companies to offer a death-in-service benefit to its employees (including salaried directors)  in a tax efficient way. Once set up by the company, the relevant life cover policy will pay out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the person insured. The employee’s family or financial dependents receive all of the proceeds.

Relevant life cover features

  • Counts as a tax-deductible business expense
  • Monthly premiums
  • Premiums are guaranteed
  • Benefits are normally free from inheritance tax
  • Maximum amount of cover is capped at £10million

Important information

  • Must be written into a discretionary trust
  • There is no cash value at any time
  • If your client stops paying their premiums, the related cover may end
  • Once the plan has been issued,  it cannot be changed
  • Claims will not be paid if the person covered dies as a result of intentionally taking their own life within the first 12 months of the policy

Who Relevant Life Cover might benefit

  • Businesses that are too small for a group life scheme
  • Employees who might exceed their personal pension lifetime allowance.
  • Members of group life schemes who want to top up their benefits as some group life schemes can be restrictive.


The person covered must be a UK resident and an employee of a UK business and cover must stop by age 75.

Relevant Life Cover is not available to sole traders or partnership companies and must be written in a discretionary trust.

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