Relevant Life Policy or Relevant Life Cover is a ‘death in service benefit’. In simple terms it is a life insurance policy taken out by a company for an employee, which will pay out directly to the employee’s beneficiary should they die whilst in employment.
Relevant Life Policies have unique tax benefits because the insurance policy is paid for by the business on the behalf of the employee. While the policy is personal to you and your employees, the policy counts as an allowable business expense – it is also tax deductible and doesn’t count towards annual or lifetime pension allowances. Effectively, the taxman helps you pay for yours and your employee’s life cover.
Although the policy is paid for by the business the sum assured goes directly to the bereaved loved ones, this is because the policy is written in trust. A trust is a legal document which states exactly where the money should go in the event of your death, this prevents the sum from becoming part of your estate and is therefore not taxed.
The FCA does not regulate Trust.
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