Relevant Life Insurance for Contractors
As a contractor, ensuring financial security for your family and dependents is vital. Relevant Life Insurance offers a unique, tax-efficient solution for limited company contractors to provide 'death-in-service' benefits through their business. This policy not only protects your loved ones but also maximises the financial benefits of operating through a limited company.
What is Relevant Life Insurance?
Relevant Life Insurance is a policy set up by your company that provides a tax-free lump sum to your family or financial dependents if you pass away or are diagnosed with a terminal illness. Unlike personal life insurance, this policy is paid for by your business and counts as a tax-deductible expense, making it a smart financial move.
How Does Relevant Life Insurance Work?
Tailored coverage
If your partner works for your company (e.g., as a company secretary), they can also be covered under a separate policy.
Trust structure
Policies must be written in a discretionary trust to ensure payouts are secure and delivered to the intended recipients.
Age limit
Policies provide coverage up to age 75, ensuring long-term peace of mind.
Beneficiaries
Payouts go directly to your family, dependents, or a charity of your choice, typically free from inheritance tax.
Why Relevant Life Insurance is Ideal for Contractors
Relevant Life Insurance offers numerous benefits tailored to contractors, including:
Tax efficiency
- Premiums are considered a business expense, reducing your company's tax bill.
- Payouts are tax-free and usually exempt from inheritance tax.
Flexibility and security
- Monthly premiums are guaranteed, offering cost stability.
- Coverage can be level or increase over time, and you can adjust policies during life milestones (e.g., having children) without additional underwriting.
- Policies are transferable, meaning you can take them with you if you switch companies or move them into your personal name.
Additional benefits
- Many policies include value-added services such as access to private GPs or a second medical opinion.
- Generous coverage limits allow you to secure up to £10 million in life insurance.
What Should Contractors Be Aware Of?
Joint Cover Not Available
Policies are tailored to individuals.
No Critical Illness Cover
This policy does not include payouts for critical illnesses.
Eligibility
Only UK residents employed by a UK business are eligible. Sole traders and partnerships do not qualify.
Coverage Ends at 75
Policies must cease by the insured person's 75th birthday.
End-to-End Support
From setting up your policy to transferring it or assisting your family with a claim, they simplify the process every step of the way.
By choosing Relevant Life Insurance, you're taking a proactive step to secure your family's financial future while benefiting from significant tax efficiencies. It's a win-win solution for limited company contractors who want to protect what matters most.
