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Relevant Life Cover

Relevant Life Cover is a tax-efficient life insurance policy, allowing companies to offer a death-in-service benefit to its employees (including salaried directors). It's set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the person insured. The proceeds go directly to the employee's family or financial dependants.

Features included as standard

  • Counts as a tax-deductible business expense
  • The premiums are paid monthly
  • Guaranteed premiums
  • Benefits usually free from inheritance tax

Options

  • Level or inflation-linked cover
  • Guaranteed increase options
  • Cover up to £10 million

Product profile

A summary of the relevant product information about Relevant Life Cover, in accordance with the Insurance Distribution Directive.

Additional services

  1. Access to the LV= member helpline gives 24/7 access to health advice, counselling services and expert legal advice
  2. LV= Doctor Services gives the insured employee access to six medical services via one simple app or phone call
  3. LV= Business Care which gives your clients free access to legal and tax experts available at the end of the phone, when they need them

A closer look...

As the policy is written as Relevant Life Cover under subsection 393B(4) of the Income Tax (Earnings and Pensions) Act 2003, your employee will not be taxed on the premiums you pay as a benefit in kind.

Claims paid from this policy won’t be subject to either income tax or capital gains tax.

As you’re insuring someone else and the policy is written into trust, the lump sum we pay out will go straight to the trustees of the policy. This means that it isn’t included in the estate of the person insured, so no inheritance tax will apply. For this reason it is essential that the policy is written into trust otherwise the policy may not demonstrate the anticipated tax efficiency.

How much tax you and your employee pay depends on your circumstances. Any references we make to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change.

The policy premium is paid every month by Direct Debit until the month immediately before the end date of the policy, or until we pay out a claim if this is earlier.

Your clients can choose to stop paying premiums at any time, but if they do then your policy will stop, they won’t be covered and you won’t get anything back.

This policy has no cash in value at any time

The premium is guaranteed. This means we won’t change it unless you ask us to change the policy or, unless you inflation-linked cover has been chosen.

Inflation-linked cover your cover will increase by inflation each year and premiums will increase by inflation multiplied by 1.5.

As the policy is placed in a discretionary trust, it does not form part of the deceased's member’s estate for inheritance tax planning purposes.

However, there are some situations in which there could be some inheritance tax to pay on the assets held in trust.

  1. A periodic charge may apply from the 10th anniversary the trust was created
  2. An exit charge may apply when anything is paid out from the trust

These charges are based on the value of the trust assets at the time. They’re unlikely to apply unless the lump sum paid out on death is held within the trust rather than being distributed straight away.

All of our features are covered in full in our policy documentation.

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 £1,073,100 (2020/21 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.

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

Discretionary trust

All Relevant Life policies must be written into a discretionary trust. Unlike most other types of trust, discretionary trusts offer flexibility if a new discretionary beneficiary needs to be added at any point. If circumstances change it can be altered by the trustees to make sure it’s still effective.

When a discretionary trust is set up, the employee will name all of the people that may want to benefit from it in the future. This can be specific people or groups (such as children or grandchildren). The employee can use a nomination form to specify how they’d like the assets to be split. However, the trustees can decide if they want to follow these instructions or not.

This information is about our discretionary trust for Relevant life Cover. For other types of trusts, please visit our trusts section.


Great reasons to choose LV= for Relevant Life Cover

Strong claims performance

Making sure your client has a successful claim is as important to your client as it is to you. Your clients get vital financial help when they need it most and you feel confident in the provider you recommended.

We’re proud of our performance with 99%* of Life Insurance claims were paid in 2019 and a total value £60.4m claims paid.

*Our Life Insurance figures include claims paid for our Life Insurance, Terminal illness, and whole of life products. Our whole of life products are no longer available.

Better underwriting

We know advisers are not usually medical experts so we help out as much as we can. This means you can concentrate on providing the best financial advice for your client.

  • We have no standard exclusions on our income protection plans making it straightforward to explain to your client.
  • Our online application system is powered by a strong, intelligent underwriting rules engine which means that you're more likely to get an instant decision.
  • We have flexible medical examination arrangements. If your client needs a medical examination, where possible we'll make sure that they're seen by their local GP, and if appropriate, offer a suitable alternative with our nationwide healthcare networks.
  • We pay for medical underwriting (except medical certificates such as sick notes).
  • We have a dedicated underwriting hotline to help you iron out any potential issues your client may have.
Value add services

LV= Doctors services

LV= Doctor Services gives the insured employee access to six medical services via one simple app or phone call.

  • Remote GP
  • Prescription Services
  • Second Opinion
  • Remote Physiotherapy
  • Remote Psychological Services
  • Discount health MOTs

Member benefits

Every client who is covered by one of our personal or business protection and retirement products automatically becomes a member of LV=. This means they are entitled to a range of added benefits and support. These include free and unlimited access to our 24/7 confidential member helpline and discounts on a number of LV= insurance products.

Our LV= member helpline gives you 24/7 access to health advice, counselling services and expert legal advice.


LV= Business Care

LV= Business Care is designed for small business owners and is available as soon as your client takes out LV= Business Protection cover. Our service gives your clients free access to legal and tax experts available at the end of the phone, when they need them.

Our service offers advice in two key areas, Legal and Tax;

Business legal advice

Direct access to legal experts specialising in business and commercial law; covering areas such as;

  • Employment law and tribunal claims
  • Health & Safety law and requirements
  • Disputes including tenancy and debt recovery
  • Commercial and contractual disputes

Advice is available 24 hours a day, 7 days a week

Business tax and VAT advice

Direct access to business tax and VAT experts made up of accountants and ex HMRC employees, covering areas such;

  • Tax and VAT relief
  • Completing a self-assessment return
  • Current and changes to tax rules
  • Dividends paid from limited companies
  • Receiving a tax investigation notice

Advice is available Monday-Friday 9am-5pm

To help justify your Business Protection recommendation, we’ve produced a set of standard suitability paragraphs for you to use. You can include these in your suitability letter and save it in your client’s file.

The paragraphs explain how LV= Business Protection works and some of the options available. They cover the core reasons for choosing Business Protection only – you may want to add your own wording. Although these paragraphs have been approved by LV=, you should check with your own compliance department before using them.

LV= has taken every care to ensure these paragraphs are accurate, although you’re responsible for ensuring they’re used to accurately reflect the advice and recommendations you've made to your clients

Suitability wording

We’ve produced a range of template paragraphs that are designed to describe generic features of each type of policy, as well as the specific benefits of our own products. You can use and adapt these paragraphs to help construct your own Suitability Letters.

Use the drop down menu to select the relevant section, then copy and paste it into your suitability letter.

 

A good suitability letter is:

  • your opportunity to justify and reinforce the reasons for your advice and recommendations
  • an excellent opportunity to document unmet and future needs and the importance of ongoing review discussions
  • your record of the discussions held and the recommendations made/not made and why

It should be clear, fair and not misleading. It should be personal, explain the reasons why a recommendation has been made and how it meets the customers needs and objectives. It should highlight any risks involved.

LV= has taken care to ensure the accuracy of the information at the time of issue but does not accept liability resulting from your use of it.

Calculators

Relevant Life Calculators

This helps you work out how much cover to recommend as well as the potential cost savings compared to your traditional life insurance policy.

Before you use our calculator, you should have the company and employee tax rates to hand, although we do provide drop down options for you to choose from.

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How we use personal information. Find out how we use your personal information, and what rights you have by visiting How we use your personal information. This includes who we are, how long we hold information, what we do with it and who we share it with.


Underwriting support

Pre-underwriting helpline

Go straight through to our underwriters who can quickly answer questions like exclusions or loading.

Email: [email protected]
Call: 0800 678 1893
8:30am to 6:30pm Monday to Friday
TextDirect: first dial 18001

Tele-interview service

Our underwriters may need more information on either a particular area, or simply in relation to the amount of cover applied for.

Our team of friendly, fully trained UK based tele-interviewers, will call your client to gather details of their health and medical history so we can assess their application. This usually takes between 20-30 mins.

You can read our Tele-interview guide to help prepare for ain interview.

Tele-interview booking service

You or your client can book a tele-interview appointment with us directly online within 30 mins, without having to contact our new business team.

  1. It's usable as soon as you have the policy number.
  2. It shows all of the appointments available.
  3. You can book appointments as early as an hour after submission or up to seven days in advance.
Underwriting and financial limits

Age next birthday

PSR*

Cotinine**

GPR

ME

HIV

BIOCHEM

PROF

HbA1c

EXECG

To age 35

£750,001

£900,001

>£1m

>£2m

>£1.5m

>£2m

N/A

N/A

>£7.5m

36-40

£600,001

£900,001

>£1m

>£2m

>£1.5m

>£2m

N/A

N/A

>£7.5m

41-45

£500,001

£800,001

£750,001

>£2m

>£1.5m

>£2m

N/A

N/A

>£5m

46-50

£400,001

£700,001

£600,001

>£1m

>£1.5m

>£1m

N/A

N/A

>£4m

51-55

£250,001

£550,001

£400,001

>£1m

>£1.5m

N/A

>£1m

>£1m

>£3m

56-60

£200,001

£450,001

£300,001

£750,001

>£1.5m

N/A

>£1m ***

>£1m

>£2m

61-65

£100,001

£250,001

£150,001

£500,001

N/A

N/A

>£1m ***

>£1m

>£1.5m

Over 65

£75,001

£150,001

£100,001

£250,001

N/A

N/A

>£1m ***

>£1m

>£1m

* PSR not required if ME required. ** Cotinine required on non smokers only. *** PSA included

Make a claim

Making a claim on behalf of your client

You can contact us in the following ways to notify us that your client wishes to make a claim;

  1. phone: 0800 756 5869
  2. email: [email protected]
  3. post: LV= Health Claims Team, Emperor House, Grenadier Road, Exeter Business Park, Exeter, EX1 3LH

The information we need

For most claims, we’ll send your client a claim form. This should be completed, and include the name and contact details of your client's GP or medical specialist, as well as any supporting medical or financial evidence requested in the claim form. We may also ask for:

  • Basic details of the reason your client is unable to work.
  • Financial evidence as detailed in the claim form.

Paying the claim

  1. We’ll keep your client (and you) informed throughout the claim.
  2. We'll contact your clients GP or medical specialist directly to follow up on any outstanding requests for medical evidence.
  3. We’ll let your client know if there’s anything they can do to speed up their claim payment.
  4. We’ll normally pay the claim within 48 hours of receiving all the required evidence and making a final decision.
  5. We offer your client free access to a medical second opinion from one of the UK’s biggest networks of medical professionals through LV=’s partner Square Health.
Claims performance

99%* of all new Life Insurance claims were paid in 2019

Here at LV=, we offer a clear and fair approach to paying claims, as we believe anyone can be affected by long-term illness – regardless of age or lifestyle. Take a look at our full 2019 claims performance.

Protection summary 2019

Life*

Total value of claims paid

£60.4m

Average claim payment

£10,747

Highest claim payment

£584,000

Average age of policy at claim

8 yrs 2 mths

Ave. age customer at claim

Life*

Male icon

Male

72

Female icon

Female

73

An icon of a man and lady

Youngest customer

28

*Our Life Insurance figures include claims paid for our Life Insurance, Terminal illness, and whole of life products (some of which are non-underwritten). Our whole of life products are no longer available.

Detail

Relevant life cover

Type of payout

Lump sum

Type of cover

Level/inflation-linked

Term

Between 5 and 45 years

Minimum age attained at entry

17

Maximum age attained at entry (level)

59

Maximum age attained at entry (inflation-linked)

69

Maximum age attained at end of policy term (level)

74

Maximum age attained at end of policy term (inflation-linked)

69

Minimum premium

£5 a month

Maximum cover

£10 million

Basis

Single life, life of another under discretionary trust

Terminal illness

Included

Eligibility criteria

  1. The insured person must permanent live in the UK and be a PAYE employee of the business taking out the plan.
  2. The business taking out the plan must be a UK registered business (i.e. not available to partnerships and sole traders)
Telephone icon

Contact us about Relevant Life Cover

Quotes and questions: 0800 678 1890

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