Relevant life cover

Relevant life cover is a life policy taken out by a company on the life of a director or employee. The benefit goes to that person’s family.

6 min read · 24 September 2026 · Written for business owners

What it is

Death-in-service cover is life cover an employer provides for its employees through a group scheme. Relevant life cover gives a company the same kind of cover for one person, including a single director.

How it is taxed

The company pays the premium.
It is normally an allowable business expense for corporation tax, subject to the wholly and exclusively test.
It is not normally a benefit in kind for you (Income Tax (Earnings and Pensions) Act 2003, section 393B; HMRC Employment Income Manual EIM15045).
The benefit is written into a trust, so it is paid to the family without going through the estate.

Because the company pays the premium before tax and it is not taxed on you, the cost to you differs from paying the same premium out of salary or dividend. A financial adviser can show you the figures.

The conditions

The tax treatment depends on the policy meeting these conditions:

The company takes out the policy on the life of a director or employee and pays the premiums.

The benefit is written into a discretionary trust for the individual’s family, so it does not pass through the company or, normally, through the estate.

The benefit must be payable only on death, or on terminal illness, before age 75, and the policy cannot have a surrender value (Income Tax (Earnings and Pensions) Act 2003, section 393B). Critical illness cover cannot be included.

How it differs from key person cover

Key person cover pays the company for the loss of someone it depends on. Relevant life cover pays the family. They are separate policies, and a business can need both.

Relevant life cover has no cash value. It pays out only on death or terminal illness, and it stops when the term ends or the premiums stop.

Who can have it

It can be taken out by a company on any employee or director, including a sole director. It gives cover where there is no death-in-service scheme.

It cannot be used by sole traders or partners in a partnership, because they are not employees of a company. The cover belongs to the company and normally ends when the employment ends.

What to check

Whether the company currently pays for any life cover.
When you last reviewed the amount of any personal cover against your mortgage and your family’s needs.
Whether company borrowing would also need to be cleared.
Whether anyone else in the business is in the same position.

Questions and answers

Will it show on my P11D?

A policy that meets the relevant life conditions is not a benefit in kind and does not go on a P11D. One that does not meet them can be.

Can the company claim the premiums?

Normally, subject to the wholly and exclusively test applied to the whole remuneration package.

What happens if I leave the company?

The policy belongs to the company. Some policies can be transferred to you or to a new employer. Ask when the policy is set up.

Is it cheaper than personal cover?

The premium is priced on age, health, smoking and the amount, as any life policy is. The company pays it before corporation tax and it is not taxed on you, so the after-tax cost differs from paying personally. A financial adviser can compare the two for you.

What to do next

Your accountant can tell you whether the company’s accounts show any life cover.
Whether relevant life cover is the right structure for you, and for how much, depends on your circumstances and is a regulated advice question. A regulated financial adviser looks at that, and your accountant can introduce you.

This sheet explains how the rules work. It is not advice, and it does not take your circumstances into account. Your accountant can talk it through with you and can introduce you to a regulated financial adviser.