A Relevant Life Plan is a term assurance plan available to employers to provide an individual death in service benefit for an employee. It is designed to pay a lump sum if the employee dies whilst employed during the length of the policy. It will also payout if the employee, whilst employed, is diagnosed with a terminal illness and meets certain definitions, except in the last 12 months of the policy.

To whom are these relevant life plan aimed at?

The majority of company directors have some personal life insurance. But nearly all of these are paying for their life insurance either personally through pre-taxed income or through their company and getting a P11D benefit-in-kind penalty for this. Up until recent years, getting the limited company to pay for personal life insurance was only possible for companies that took group life insurance, often these type of policies were only possible for companies wishing to insure 10 or more employees.

Why Choose a Relevant Life Plan?

  • More cover, less questions – up to 25 x remuneration multiples and while some providers need supporting financial evidence at lower levels of cover, we don’t ask to see financial evidence until the benefit exceeds £3.5 million.
  • Continuation Cover* – if your client leaves their company they can convert their RLP to a personal plan or move it to a new employer without the need for further medical evidence or underwriting.
  • Guaranteed Insurability Option* – increase your client’s level of cover for salary increases as well as mortgage increases, moving house, getting married and becoming a parent.
  • Accidental Death Benefit* – While your client’s application is being underwritten they are automatically covered.

Death in Service savings?

Relevant life plans are similar to most other types of life cover except they aim to provide a tax-efficient Death in Service benefit provided by an employer for an employee.

This means that for a higher-rate taxpayer, the company director can save 49 per cent, by paying for their personal life insurance via a relevant life plan. For a basic-rate taxpayer the saving is still significant at around 36 per cent. The problem is that most company directors and even accountants have never heard of the plan. Therefore the uptake of the policy is very small compared to the number of people who could benefit and save.

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