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Is Relevant Life Cover right for your client? Find out with our easy to use calculator

Relevant Life Cover

Setting up Relevant Life Cover

Relevant Life Cover is arranged on an individual and life-of-another basis with the employer as the policy holder, and the employee as the person insured. Relevant Life Cover premiums are paid for by the employer, and unlike group schemes, usually treated by HM Revenue & Customs as a business expense.

The premiums and benefit paid won’t count towards the employee’s lifetime pension allowances, offering an attractive life insurance option for people with a large pension pot.

Please note: The current standard pension Lifetime Allowance is £1million (2016/17 tax year). Any pension benefits taken above this limit is subject to a Lifetime Allowance Tax charge of 55% if taken as a lump sum and 25% if taken as income. This includes any life insurance written under pension rules, for example group insurance schemes.

Many employers choose to set the amount of cover as a multiple of their employee's salary. LV= calculates a suggested maximum amount of cover based on the employee's age and gross annual earnings.

You can use our Relevant Life Cover calculator to work out if this cover is suitable for your client.

How the cover works

The company insures the employee/s and polices are written into a discretionary trust. If the named employees dies or is diagnosed with a terminal illness, the money is paid to the trustees. The trustees then pay the money to the named beneficiaries.

Tax implications

HMRC usually treat the premiums as an allowable business expense (so not included as a P11D benefit), providing the local Inspector of Taxes is satisfied they qualify under the ‘wholly and exclusively’ rules. This means the premiums and benefits usually qualify for relief on:

  • Income tax
  • Capital gains tax
  • Corporation tax
  • National insurance

Find out more about tax implications

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Our Relevant Life Cover includes valuable telephone support for your clients and their employees.

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FOR UK FINANCIAL ADVISERS ONLY
LV=, County Gates, Bournemouth, BH1 2NF, UK