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Relevant Life Insurance for DirectorsTax-Efficient Death in Service for Company Directors
Discover how relevant life insurance lets company directors get life cover paid by their limited company — fully tax-deductible with no benefit-in-kind charge.
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Book a Free ConsultationKey Facts: Relevant Life Insurance for Directors
Relevant life insurance for directors is one of the most tax-efficient employee benefits available to UK limited company directors.
- -Premiums paid by the company are corporation tax deductible as a business expense
- -No P11D benefit-in-kind charge for the director — no income tax or NI on premiums
- -Company saves 13.8% employer NI compared to equivalent salary
- -Payout via trust is outside the estate for inheritance tax purposes
- -Available to sole directors of one-person limited companies
- -No pension lifetime allowance restrictions — unlike group death-in-service schemes
What Is Relevant Life Insurance for Directors?
Relevant life insurance for directors is a life insurance policy taken out by a limited company on the life of a director. The company pays the premiums, which are fully deductible against corporation tax. Unlike most employee benefits, there is no benefit-in-kind (P11D) charge, meaning the director pays no income tax or National Insurance on the premiums.
This makes it significantly cheaper than buying personal life insurance from post-tax income. According to HMRC guidance (BIM45525), relevant life policies qualify as an allowable business expense when properly structured.
The policy pays out a tax-free lump sum to the director's family if they die during the policy term. Because the policy is held in a relevant life trust, the payout is outside the director's estate for inheritance tax purposes.
The FCA regulates all relevant life policies. The Companies House register shows millions of eligible director-led companies. According to ONS business data, the majority of UK companies have 1-5 employees, making relevant life the ideal choice over group schemes.
The GOV.UK P11D guidance confirms relevant life is exempt from benefit-in-kind reporting. Money Helper recommends directors consider relevant life as part of their financial planning. The Wikipedia article on relevant life policies provides additional context on this UK-specific product.
For a broader overview of how relevant life works for all employees, see our complete relevant life insurance guide.
Sole Directors
Directors of their own one-person limited company can take out relevant life insurance on themselves. You must be taking a salary from the company, even a small one.
Tax Savings for Directors: Worked Example
The tax efficiency of relevant life insurance for directors is best illustrated with a real-world example. According to Limited Company Help, a higher-rate taxpayer director can save approximately 49.5% compared to personal cover:
Personal Policy Cost (Post-Tax)
Premium: £50/month. Director needs to earn £100/month gross (at 40% tax + 2% NI) to net £50. Employer NI at 13.8% adds £13.80. Total cost to company: £113.80/month.
Relevant Life Policy Cost (Pre-Tax)
Same £50/month premium paid directly by the company. Corporation tax relief at 25% reduces effective cost to £37.50/month. No employer NI, no employee NI, no P11D.
Annual Saving: £915+ per year
Company saves £915/year on NI and grossing-up costs. Director saves £252/year in personal tax. Combined saving: over £1,167 per year on a single £50/month policy.
Post-Pension Lifetime Allowance Abolition
Since April 2024, relevant life policies are not affected by the new Lump Sum and Death Benefit Allowance — making them particularly appealing for high earners. Source: <a href='https://www.mykeymaninsurance.com/relevant-life-policy-hmrc-tax-treatment' target='_blank' rel='noopener'>MyKeyManInsurance</a>.
Relevant Life vs Other Director Insurance Options
Relevant Life vs Personal Life Insurance
Key Person Insurance
Company pays premiums (corp tax deductible). No P11D, no NI, no income tax for the director. Payout via trust, outside estate for IHT.
Other Product
Director pays from post-tax salary. No tax relief. Payout may be in estate for IHT unless written in trust.
When you need it: Relevant life is almost always preferable for directors of limited companies. Personal policies suit sole traders who cannot access relevant life.
Relevant Life vs Key Person Insurance
Key Person Insurance
An employee benefit — payout goes to the director's family. Protects the individual and their dependants.
Other Product
A business protection policy — payout goes to the company. Protects the business from financial loss of losing the director.
When you need it: Most directors need both. Key person insurance protects the company; relevant life protects the family. See our <a href='/key-person-insurance-for-directors'>key person insurance for directors</a> guide.
Relevant Life vs Group Death in Service
Key Person Insurance
Individual policy, no minimum employees, no pension lifetime allowance restrictions. Flexible cover amounts per director.
How to Set Up Relevant Life Insurance as a Director
Setting up relevant life insurance for directors is straightforward. Here is what you need to do:
- Confirm eligibility — You must be a director of a UK limited company taking a salary (even the minimum). The company must be the policyholder.
- Choose your cover level — Typically 10-20x annual salary, but there is no fixed limit. The amount should be reasonable and justifiable to HMRC.
- Complete a trust deed — The policy must be held in a relevant life trust. Your insurer provides this at no extra cost. This keeps the payout outside your estate.
- Company applies and pays — The company completes the application and pays premiums from company funds. Premiums are recorded as a corporation tax deductible business expense.
- Inform your accountant — Let your accountant know so they can correctly record the premiums in your company accounts and corporation tax return.
For more on how relevant life fits within broader business life insurance, see our complete guide. You can also explore key person insurance for limited companies for complementary protection.
Relevant Life Insurance for Directors: Key Numbers
£88
Average CPC for relevant life insurance for directors
Source: DataForSEO March 2026
KD 3
Keyword difficulty — very low organic competition
Source: DataForSEO March 2026
42%
Of company directors have no personal life insurance
Source: Drewberry Insurance Director Survey 2024
25%
Corporation tax rate — savings on every premium pound
Source: HMRC Corporation Tax 2025/26
13.8%
Employer NI saved vs paying equivalent salary
Source: HMRC NI rates 2025/26
£0
P11D benefit-in-kind charge for the director
Source: HMRC relevant life policy rules
Trusted Sources & Further Reading
This guide on relevant life insurance for directors references:
- HMRC BIM45525 — Relevant life policies qualify as allowable business expenses
- ABI Claims Data 2024 — £5.32bn in individual protection claims paid in 2024
- Limited Company Help — Worked example: ~49.5% saving for higher-rate taxpayers vs personal cover
- MyKeyManInsurance — Relevant life not affected by Lump Sum and Death Benefit Allowance
- Drewberry Insurance — Corporation tax savings, no P11D, no NIC implications
- FCA Insurance Guidance — Relevant life policies are FCA-regulated
- GOV.UK Director Responsibilities — Duties and obligations for company directors
- Legal & General Technical Guide — The Anderson Principles and HMRC pre-clearance approach
Relevant Life Insurance For Directors FAQs
How much does relevant life insurance for directors cost?
Premiums depend on the director's age, health, smoker status and cover amount. For a healthy non-smoking 40-year-old director with £500,000 cover over 20 years, typical premiums are £30-50 per month. The company pays these premiums and claims corporation tax relief, making the effective cost around £22-37 per month after tax.
Can a sole director of a one-person company get relevant life insurance?
Yes. Sole directors of one-person limited companies qualify for relevant life insurance, provided they are drawing a salary from the company. Even a small salary at the NI threshold level is sufficient. The company pays the premiums and claims corporation tax relief.
Is there a maximum cover amount for relevant life insurance for directors?
There is no fixed maximum, but the cover amount should be reasonable and justifiable. HMRC may query cover that seems excessive relative to the director's salary and role. A common approach is 10-20x annual salary. Some insurers offer cover up to £10 million or more.
Do I need both relevant life insurance and key person insurance as a director?
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