Relevant Life Cover Quotes UK: 2025 Guide

Protecting your key people is protecting your business. For UK company directors and employees, finding comprehensive life insurance is crucial, but navigating the options can feel overwhelming. Have you considered how to provide this protection in the most tax-efficient way possible? Relevant Life Cover (RLC) offers a compelling solution, particularly for small and medium-sized businesses. This guide, updated for 2025, dives deep into Relevant Life Cover, explaining what it is, its significant tax advantages, and how to secure competitive relevant life cover quotes.

Understanding the nuances of different insurance products and providers is key to finding the right fit. At Insurance By Heroes, we specialise in making this process clear and straightforward. As an independent insurance agency, founded by a former first responder and military spouse, we bring a unique perspective rooted in service and dedication. Our team, many with public service backgrounds, understands the importance of reliable protection. We aren’t tied to a single insurer; instead, we work with dozens of top UK carriers. This allows us to meticulously compare the market and find tailored solutions, including the most suitable relevant life cover quotes for your specific business needs and employee circumstances.

What is Relevant Life Cover?

Relevant Life Cover is a type of death-in-service benefit policy taken out and paid for by a company, but designed to pay out a tax-free lump sum directly to the employee’s family or financial dependents if the employee passes away while employed during the policy term. Crucially, it’s set up on an individual basis for each employee, unlike traditional group life schemes which cover multiple employees under one master policy.

The policy is owned by the business, making the premiums a potential business expense, but the payout itself is typically paid via a discretionary trust. This structure is vital for achieving the tax efficiencies associated with RLC. It ensures the benefit bypasses the employee’s estate (and potentially the business’s assets) and goes directly to the intended beneficiaries without usually incurring Inheritance Tax (IHT).

This type of cover is often favoured by:

• Small businesses that don’t have enough eligible employees to set up a full group life scheme (most group schemes require a minimum number of members).
• Company directors who wish to secure life cover through their limited company in a tax-efficient manner.
• High-earning employees who might exceed the lifetime allowance limits under a registered group life scheme (RLC payouts do not typically count towards the pension lifetime allowance).
• Businesses wanting to offer a valuable benefit to key employees on an individual basis.

Because the specifics of eligibility and setup can differ slightly between insurers, partnering with an independent agency like Insurance By Heroes is advantageous. We can navigate the offerings from numerous providers to find the policy structure that best aligns with your company and the employee you wish to cover, ensuring you get appropriate relevant life cover quotes based on accurate information.

Who is Eligible for Relevant Life Cover?

While generally straightforward, eligibility for Relevant Life Cover does have specific criteria set by HMRC and insurers. Typically, the individuals eligible for RLC are:

• Employees of a UK-based business (including limited companies, charities, partnerships with corporate partners).
• Company directors (provided they are drawing a salary via PAYE).

However, there are key exclusions:

• Sole traders cannot take out RLC on themselves, as there isn’t the necessary employer-employee relationship distinction required by the legislation.
• Equity partners in a traditional partnership or members of a Limited Liability Partnership (LLP) are usually not eligible unless they also have a separate contract of employment and are paid a salary. Their share of profits doesn’t typically qualify them.
• Individuals whose primary remuneration is dividends rather than salary may face challenges or limitations, although salaried directors receiving dividends are usually eligible.

It’s also important that the cover is solely for ‘death-in-service’ benefits. Adding other benefits like critical illness cover directly to the RLC policy can negate the favourable tax treatment, although separate policies can often be arranged. The policy must generally pay out a lump sum on death and cannot have a surrender value.

Understanding these nuances is critical. An insurer might decline an application if the structure isn’t quite right, or worse, the tax benefits could be challenged later by HMRC if the rules aren’t followed. This is where Insurance By Heroes provides significant value. We assess your specific situation and the employee’s role within the business against the criteria of various insurers. By working with dozens of carriers, we can identify those most likely to offer favourable terms and competitive relevant life cover quotes for your eligible employees, ensuring compliance from the outset.

Key Benefits of Relevant Life Cover

The primary appeal of Relevant Life Cover lies in its exceptional tax efficiency compared to personal life insurance or even sometimes salary increases intended to cover personal policy premiums. Let’s break down the advantages:

Tax Efficiency for the Employer:

• Corporation Tax Relief: For limited companies, the premiums paid for RLC are generally considered an allowable business expense. This means they can typically be offset against the company’s corporation tax bill, effectively reducing the net cost of providing the cover. HMRC’s ‘wholly and exclusively’ rule applies, meaning the expense must be purely for business purposes (remunerating the employee), which is usually the case for RLC.

Tax Efficiency for the Employee:

• No Benefit-in-Kind (BiK): Unlike many other employee benefits (like company cars or private medical insurance), the premiums paid by the employer for RLC are not usually treated as a P11D benefit-in-kind for the employee. This means the employee doesn’t face additional Income Tax or National Insurance contributions on the value of the premium paid by their employer.
• Income Tax-Free Payout: When the policy pays out upon the employee’s death, the lump sum received by the beneficiaries via the discretionary trust is generally free from Income Tax.
• Inheritance Tax (IHT) Free Payout: Because the payout is made via a trust, it typically does not form part of the deceased employee’s estate for Inheritance Tax purposes. This ensures the full benefit amount reaches the family without being potentially reduced by a 40% IHT charge (above the nil-rate band).

Cost Savings Comparison:

Consider an employee paying for personal life insurance from their net (post-tax) income. A higher-rate taxpayer needs to earn significantly more gross salary to cover the premium compared to a company paying the premium pre-tax for RLC. For example, for a £100 monthly premium on a personal policy, a 40% taxpayer might need to earn around £167 pre-tax to have £100 left over. With RLC, the company might pay the £100 premium, potentially get corporation tax relief (reducing the net cost to perhaps £81 depending on the rate), and the employee pays nothing in BiK tax. The difference is substantial.

Navigating the tax rules and ensuring the policy is set up correctly to secure these benefits requires careful attention to detail. At Insurance By Heroes, we don’t just find you relevant life cover quotes; we help you understand the implications and guide you through the process. Our commitment, stemming from our roots in public service, is to ensure you have the right protection in place, structured effectively.

How Does Relevant Life Cover Work?

Setting up and managing a Relevant Life Cover policy involves several key steps:

1. Application: The company applies for the cover on behalf of the employee. This involves providing details about the business, the employee (age, health, lifestyle, occupation, salary), and the desired level of cover (often a multiple of salary, e.g., 10x or 15x).
2. Underwriting: The insurer assesses the risk based on the employee’s details. This may involve questionnaires about health and lifestyle, GP reports, or medical examinations, especially for higher sums assured or older applicants. The underwriting outcome determines the final premium. This is a stage where different insurers can vary significantly in their approach, impacting the final relevant life cover quotes.
3. Trust Setup: This is a critical step. The policy must be written into a discretionary trust from the outset. The insurer will typically provide standard trust documentation. The company (as the policy owner) is usually the settlor, and appoints trustees (often including company directors and potentially a family member or professional trustee). The potential beneficiaries (e.g., spouse, children, dependents) are named or defined as a class within the trust deed.
4. Policy Issue: Once underwriting is complete and the trust is in place, the insurer issues the policy documents to the company.
5. Premium Payments: The company pays the regular premiums to the insurer. These premiums are typically fixed for the policy term unless cover levels are changed.
6. Claim Process: If the insured employee passes away during the policy term while employed by the company, the trustees initiate a claim with the insurer. They will need to provide necessary documentation, such as the death certificate.
7. Payout: The insurer pays the lump sum benefit directly to the trustees. The trustees then distribute the funds to the beneficiaries according to the terms of the trust deed and their discretion, guided by any letter of wishes left by the employee.

The trust is indispensable. Without it, the payout might go to the company first, potentially becoming liable for Corporation Tax or difficult for beneficiaries to access. Or, if deemed payable directly to the estate, it could be subject to IHT and probate delays. Insurance By Heroes understands the importance of this structure and works with you and the insurer’s documentation to ensure it’s correctly established, safeguarding the tax benefits and ensuring funds reach the intended recipients swiftly.

Relevant Life Cover vs. Group Life Insurance

While both provide death-in-service benefits, RLC and Group Life Insurance cater to different needs and company structures.

Relevant Life Cover (RLC):

• Structure: Individual policies for specific employees.
• Typical Use Case: Small businesses without enough members for a group scheme, company directors, key high-earning employees.
• Underwriting: Fully underwritten based on the individual’s health and lifestyle.
• Flexibility: Policies tailored to the individual’s circumstances (e.g., specific cover multiple).
• Cost: Can be higher per person initially due to individual underwriting but offers significant tax advantages.
• Tax Treatment: Premiums usually a business expense, no BiK for employee, payout via trust typically IHT free. Does not usually count towards pension lifetime allowance.

Group Life Insurance (GLS):

• Structure: One master policy covering a group of employees.
• Typical Use Case: Larger companies wanting to offer a standard benefit to all (or a category of) employees. Often requires a minimum number of members (e.g., 5 or 10).
• Underwriting: Often features a ‘free cover limit’. Employees seeking cover below this limit may not need medical underwriting. Cover above the limit requires underwriting. Simpler administration for large groups.
• Flexibility: Often a standard level of cover for all members (e.g., 4x salary), though different categories can exist. Less individual tailoring.
• Cost: Can be very cost-effective per person due to group pooling of risk, especially below the free cover limit.
• Tax Treatment: If registered under pension rules, premiums are a business expense, no BiK, payout via trust typically IHT free. However, payouts may count towards the employee’s pension lifetime allowance (though current rules have altered the LTA charge, the allowance itself still technically exists for certain calculations). Unregistered schemes have different tax implications.

Choosing between RLC and GLS depends heavily on the company’s size, structure, objectives, and the specific employees being covered. For a small business wanting tax-efficient cover for its directors, RLC is often the perfect fit. For a larger firm needing a blanket benefit, GLS might be more practical. Sometimes, a combination can be used.

Because no single solution fits every business, getting advice is crucial. Insurance By Heroes, as an independent agency working with dozens of carriers, can analyse your specific requirements and compare both RLC and GLS options (if applicable) to find the optimal strategy for your business, ensuring you receive relevant and comparable quotes, including relevant life cover quotes if that route is chosen.

Relevant Life Cover vs. Personal Life Insurance

The key difference here lies in ownership, payment structure, and tax efficiency.

Relevant Life Cover (RLC):

• Owned by: The company.
• Paid for by: The company, using pre-tax income.
• Tax on Premiums (Employee): Typically none (no BiK).
• Tax on Premiums (Company): Generally tax-deductible as a business expense.
• Tax on Payout: Generally free of Income Tax and IHT (via trust).
• Portability: Tied to employment. Cover ceases if the employee leaves the company (though some policies may offer continuation options at personal expense).

Personal Life Insurance:

• Owned by: The individual.
• Paid for by: The individual, using post-tax income (from salary, dividends etc.).
• Tax on Premiums (Employee): Paid from income already subject to Income Tax and NI.
• Tax on Premiums (Company): Not applicable (paid by individual).
• Tax on Payout: Generally free of Income Tax. Can be liable for IHT if not written in trust, or if written in trust but forms part of the estate for other reasons.
• Portability: Completely independent of employment. The individual owns the policy and it continues as long as premiums are paid, regardless of job changes.

The potential cost saving with RLC is significant due to the pre-tax premium payments and corporation tax relief. However, the link to employment is a key consideration. Personal life insurance provides continuity that RLC does not. For some individuals, particularly those needing cover beyond their working life or wanting absolute certainty regardless of employment status, a personal policy (perhaps alongside RLC) might still be necessary.

Making the right choice involves weighing the tax benefits against portability and individual needs. Insurance By Heroes can help you and your employees understand these trade-offs. We provide clear comparisons and can source quotes for both RLC and personal policies from our wide panel of insurers, allowing you to make an informed decision.

Getting Relevant Life Cover Quotes

Securing competitive relevant life cover quotes requires providing accurate information and comparing offers from multiple insurers. Several factors significantly influence the premium:

• Employee’s Age: Younger applicants generally receive lower premiums, as the statistical risk of death is lower.
• Health and Medical History: Pre-existing conditions, family medical history, height, and weight can all impact the premium. Full disclosure is essential during the application process.
• Lifestyle Factors: Smoking or vaping significantly increases premiums. Hazardous hobbies or excessive alcohol consumption can also affect the cost.
• Occupation: Jobs involving higher risk (e.g., working at heights, hazardous materials) may result in higher premiums compared to office-based roles.
• Sum Assured: The amount of cover required. This is often set as a multiple of the employee’s annual remuneration (salary, bonuses, P11D benefits). Higher cover means higher premiums.
• Policy Term: The duration for which the cover is needed, often set to the employee’s planned retirement age. Longer terms generally mean higher premiums.
• Insurer’s Underwriting Philosophy: Different insurers assess risk factors differently. One insurer might offer better rates for a specific health condition or occupation than another.

This last point is precisely why comparing the market is non-negotiable when seeking relevant life cover quotes. Simply accepting the first quote you receive could mean overpaying significantly or not getting the most suitable terms.

This is where Insurance By Heroes truly shines. As an independent insurance agency, we have no allegiance to any single provider. Our loyalty is entirely to you, our client. We leverage our access to dozens of the UK’s leading life insurance companies to conduct a comprehensive market comparison on your behalf.

Our team, instilled with the values of diligence and care from public service backgrounds – inspired by our founder, a former first responder and military spouse – takes the time to understand your business and the specific needs of the employee requiring cover. We then meticulously gather and compare relevant life cover quotes, presenting you with the most competitive and suitable options. We handle the complexities of comparing different policy features and underwriting stances, saving you time and potentially significant amounts of money over the policy term.

The Importance of Setting Up a Trust

We’ve mentioned the trust several times, but its importance cannot be overstated for Relevant Life Cover. Setting up the policy within a discretionary trust from the beginning is fundamental to achieving the intended tax benefits and ensuring a smooth payout process.

Here’s why the trust is crucial:

• Avoiding Inheritance Tax (IHT): By placing the policy in trust, the proceeds are paid to the trustees and typically fall outside the employee’s estate for IHT calculations. This can save beneficiaries up to 40% of the payout value.
• Avoiding Probate Delays: Trust assets are separate from the deceased’s estate. This means the trustees can usually claim the policy proceeds relatively quickly after death without waiting for Grant of Probate, which can take months or even years. This provides faster financial support to the family when they need it most.
• Ensuring Funds Reach Beneficiaries: The trust deed outlines who the potential beneficiaries are (e.g., spouse, civil partner, children, other dependents). The trustees distribute the funds according to the deed and any letter of wishes from the employee, ensuring the money goes where intended.
• Protecting Funds from Creditors: In some circumstances, assets held in trust may be protected from creditors of the deceased’s estate or even the business itself.

Insurers providing RLC typically offer standard trust documentation free of charge. While setting up the trust is usually straightforward using these documents, it’s vital to complete them accurately. The company acts as the settlor, and trustees need to be appointed. These are often company directors, but sometimes family members or professional trustees are included.

Insurance By Heroes assists clients in understanding the trust forms provided by the chosen insurer and highlights the importance of completing them correctly as part of the application process. While we cannot provide legal advice on trusts (complex situations may require a solicitor), we ensure this critical step is not overlooked, safeguarding the policy’s effectiveness and tax efficiency.

Potential Drawbacks or Considerations

While RLC offers significant advantages, it’s important to be aware of potential limitations:

• Link to Employment: The cover is conditional on the individual remaining an employee of the company that took out the policy. If the employee leaves their job, the cover typically ceases. Some policies offer a ‘continuation option’, allowing the employee to take over the policy personally (paying premiums themselves) without further medical underwriting, but this isn’t always available or may have restrictions.
• Eligibility Restrictions: As mentioned, it’s not suitable for sole traders, equity partners, or LLP members without employment contracts.
• Cover Limits: Insurers often cap the maximum sum assured based on a multiple of the employee’s total remuneration. Businesses needing exceptionally high cover levels might need supplementary solutions.
• Focus on Death Benefit: Standard RLC policies only cover death. Critical illness cover cannot usually be included within the same tax-efficient wrapper, requiring separate arrangements if desired.
• HMRC Rule Changes: Tax legislation can change. While RLC is currently well-established, businesses should be aware that future government changes could potentially alter the tax treatment, although this is true of many financial products. Regular reviews are sensible.

Understanding these points is crucial for making an informed decision. It reinforces the need for tailored advice. A one-size-fits-all approach doesn’t work. Insurance By Heroes helps you weigh the pros and cons in the context of your specific business and employee needs, ensuring you understand the full picture before proceeding. Because we work with many different insurers, we can also highlight policy variations, such as the availability and terms of continuation options, helping you choose the most flexible solution.

Why Choose Insurance By Heroes for Your Relevant Life Cover Quotes?

Choosing the right insurance partner is as important as choosing the right policy. At Insurance By Heroes, we offer a distinct advantage:

• Truly Independent Advice: We work for you, not the insurance companies. Our recommendations are based entirely on your best interests and finding the most suitable cover at the most competitive price.
• Extensive Market Access: We partner with dozens of the UK’s leading life insurance providers. This allows us to conduct a thorough market comparison, ensuring you see the best available relevant life cover quotes and policy options.
• Specialist Expertise: We understand the complexities of Relevant Life Cover, including eligibility rules, trust requirements, and tax implications. We guide you through the process, making it clear and manageable.
• Tailored Solutions: We don’t believe in off-the-shelf products. We take the time to understand your unique business needs and the circumstances of the employees you wish to cover, tailoring our search accordingly.
• Commitment to Service: Our agency was founded by a former first responder and military spouse, and many of our team members share a background in public service. We bring that ethos of dedication, care, and thoroughness to protecting our clients and their businesses. We understand the importance of getting it right.
• Simplicity and Clarity: We aim to demystify insurance jargon and provide clear, straightforward advice, helping you make confident decisions.

We help businesses across the UK secure vital protection for their key people efficiently and cost-effectively. Let us put our expertise and market access to work for you.

Get Your Personalised Relevant Life Cover Quotes Today

Relevant Life Cover offers a powerful, tax-efficient way for UK businesses to provide crucial life insurance benefits for directors and employees. Its structure provides significant advantages for both the company and the employee’s family compared to personal policies or salary adjustments.

However, navigating the eligibility rules, understanding the trust requirements, and finding the most competitive premiums requires specialist knowledge and access to the wider insurance market. Relying on a single insurer or attempting to navigate this alone can lead to suboptimal cover or missed opportunities for savings.

Take the first step towards securing affordable, tax-efficient protection for your key personnel. Let the dedicated team at Insurance By Heroes simplify the process for you. We’ll leverage our independence and access to dozens of insurers to find the most competitive and appropriate relevant life cover quotes tailored specifically to your business needs.

Ready to explore your options? Fill out our simple quote form now. Our experts will compare the market and provide you with personalised, no-obligation relevant life cover quotes designed to protect what matters most.