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📋 '''Relevant life insurance''' is a UK-specific [[Definition:Life insurance | life insurance]] arrangement in which an employer takes out an individual death-in-service policy on the life of an employee, with the proceeds payable to the employee's nominated beneficiaries through a [[Definition:Trust | trust]]. It is designed as an alternative to a registered [[Definition:Group life insurance | group life insurance]] scheme, offering a tax-efficient route — particularly for small businesses, high earners, and company directors — to provide a lump-sum death benefit without the benefit being subject to the [[Definition:Lifetime allowance | lifetime allowance]] (prior to its abolition) or annual allowance restrictions associated with registered pension schemes. The policy premiums are treated as a deductible business expense for [[Definition:Corporation tax | corporation tax]] purposes, and the benefit is structured to fall outside the employee's estate for [[Definition:Inheritance tax | inheritance tax]] purposes.

⚙️ The employer purchases the policy and pays the premiums, which must satisfy HM Revenue & Customs conditions to qualify for favorable tax treatment — the cover must be written under trust, the sole purpose must be providing a benefit on death in service (or within a limited period after leaving service), and the benefit must not exceed a reasonable multiple of the employee's [[Definition:Remuneration | remuneration]]. The policy is written on a single-life basis and placed into a discretionary or absolute trust from inception, ensuring the death benefit bypasses the employee's estate and is paid directly to the trustees for distribution to beneficiaries. Unlike a registered group life scheme, which requires a minimum number of members and is subject to pension regulations, relevant life insurance can be arranged for a single employee and does not count toward pension [[Definition:Annual allowance | annual allowance]] limits, making it particularly attractive for directors of small limited companies or employees who have already maximized their pension contributions.

💡 Since its emergence following changes to UK pension taxation in 2006, relevant life insurance has grown into a well-established niche within the UK [[Definition:Employee benefits | employee benefits]] market. [[Definition:Insurance broker | Brokers]] and financial advisers frequently recommend it alongside, rather than instead of, traditional group life arrangements — using it to top up cover for individuals whose benefits would otherwise be restricted. Several major UK [[Definition:Life insurance | life insurers]] offer dedicated relevant life products with streamlined underwriting and trust documentation. While the concept is specific to the UK tax and legal framework, analogous employer-funded individual life policies exist in other markets, though the precise tax treatment varies. For advisers working with owner-managed businesses and professional practices, relevant life insurance remains one of the most efficient tools for delivering death-in-service protection without the pension-related complications that constrain registered schemes.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Group life insurance]]
* [[Definition:Death-in-service benefit]]
* [[Definition:Employee benefits]]
* [[Definition:Trust]]
* [[Definition:Key person insurance]]
* [[Definition:Life insurance]]
{{Div col end}}

Definition:Relevant life insurance - Revision history

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