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Relevant life insurance, paid by the company
Relevant life insurance is single life cover an employer takes out and pays for on behalf of an employee or director, with the benefit paid through a trust to their family (Royal London ↗).
HMRC sets the conditions (HMRC ↗), and insurers say the premiums are not a P11D benefit (Royal London ↗).
It gives one employee the kind of death benefit a group death in service scheme gives many.
Every claim here is our summary of a named external source, linked beside it. Sources change: check the wording at the link before you rely on it.
Relevant life insurance, the key facts
A relevant life policy is defined in section 393B of ITEPA 2003 (legislation.gov.uk ↗).
The employer pays, the policy sits in trust from the start (Royal London ↗), and the money goes to the employee's beneficiaries, not the company.
Since 6 April 2019 the employer's provision can be for any individual or a recognised charity, not only the employee's family (HMRC ↗).
HMRC (HMRC ↗)
Legal & General (Legal & General ↗)
HMRC (HMRC ↗)
How relevant life insurance works
Aviva says the employer takes out the policy and pays the premiums, and it must be written under Aviva's Relevant Life Trust for the employee's chosen beneficiaries (Aviva ↗).
Royal London says that makes it a trustee-owned plan, not a company asset (Royal London ↗); Legal & General describes the employer as the owner (Legal & General ↗).
All three write it into trust.
Royal London says the plan can provide only life cover or terminal illness benefit, with no disability or critical illness benefits (Royal London ↗).
Legal & General's pays if the person insured passes away, or on a terminal illness diagnosis with life expectancy under 12 months, while the person is employed (Legal & General ↗).
Set up
The employer takes out the policy
On the life of an employee or director, and pays the premiums.
Trust
It is written in trust from the start
For the employee’s chosen beneficiaries: individuals or charities.
Claim
If the employee passes away or is terminally ill
Under an age no higher than 75, while the cover is in force.
Payout
The trustees pay the beneficiaries
The money goes to the family or other beneficiaries, not to the company.
From Aviva (Aviva ↗), Royal London (Royal London ↗) and HMRC (HMRC ↗).
Tax advantages of relevant life insurance
HMRC's part is written down.
Section 307 of ITEPA 2003 means no income tax arises under the residual benefits charge on an employer's provision for a death benefit (legislation.gov.uk ↗), and a payment from a relevant life policy is not chargeable under the employer-financed retirement benefits rules (HMRC ↗).
The rest is the insurers' reading.
Royal London says HMRC does not treat the premiums as a P11D benefit and neither employer nor employee pays National Insurance on them (Royal London ↗), and that the premiums are generally a business expense if paid wholly and exclusively for the business (Royal London ↗).
It also warns that the trust can face periodic charges of up to 6% on value above its nil rate band at ten-year anniversaries (Royal London ↗).
Tax depends on your facts.
Check it with your accountant before you rely on it.
Rows marked Royal London are the insurer's statement of the position, not HMRC's words. Check each at its link.
Relevant life insurance vs other options
Relevant life is one of three ways an employer can put life cover on its people, and the three pay different people.
Key person cover pays the employer (Legal & General ↗).
A group scheme can be an excepted group life policy, which must also pay on death under an age no higher than 75 (legislation.gov.uk ↗).
Legal & General says its Relevant Life Plan should not be used for business protection, such as key person or shareholder protection (Legal & General ↗).
Who can get relevant life insurance?
The person covered must be an employee.
Legal & General says that usually includes company directors on PAYE and salaried partners, but not LLP members or sole traders, as owners of their own business (Legal & General ↗).
Aviva includes salaried company directors, partners and employees of sole traders, but not equity partners, sole traders or anyone self-employed (Aviva ↗).
Aviva takes applicants aged 18 to 73 for life cover only (Aviva ↗), and Legal & General's plan ends by age 75 (Legal & General ↗).
Legal & General sets the most cover by age and remuneration, up to 25 times for ages 18 to 49 (Legal & General ↗).
Tick what describes the person to be covered: the needle reads the insurers' published rules, not a ruling, and nothing you tick is stored or sent.
Tick what describes you
The needle moves with each answer.
From Legal & General (Legal & General ↗) and Aviva (Aviva ↗).
Check it for yourself
Every claim on this page is our summary of one of the documents listed here.
We last checked them against the live sources on 28 September 2026.
The documents are the authority, not this page.
Insurers and HMRC update them, so validate any figure or condition at its link before you rely on it.
- HMRC Employment Income Manual, EIM15045 ↗Relevant life policy conditions and the EFRBS treatment
- HMRC Employment Income Manual, EIM21800 ↗The s307 exemption, for any individual or charity since April 2019
- ITEPA 2003, section 393B ↗Where "relevant life policy" is defined
- ITEPA 2003, section 307 ↗No benefits-code charge on death-benefit provision
- HMRC Business Income Manual, BIM45525 ↗What key person cover insures against
- HMRC Insurance Policyholder Taxation Manual, IPTM7035 ↗Share buy-out policies are not excepted group life policies
- Legal & General key person entry ages ↗Oldest entry ages for key person cover
- ITTOIA 2005, section 481 ↗Excepted group life policies
- HMRC Inheritance Tax Manual, IHTM17092 ↗Excepted group life scheme trusts
- Royal London relevant life FAQs ↗Eligibility, conditions, tax, trust and leaving
- Legal & General relevant life guide ↗Eligibility, cover multiples, tax and leaving (W13965)
- Aviva Relevant Life Insurance adviser guide ↗Eligibility, ages, the Relevant Life Trust and leaving
- LV= Adviser: business protection tax treatment ↗Relevant life premiums and proceeds
- Legal & General key person insurance ↗Who owns, pays for and receives key person cover
Relevant life insurance, answered
Not financial advice. This page is general information. Before buying insurance, the FCA tells consumers to check the firm on its Firm Checker (FCA ↗). For free guidance, see MoneyHelper.