Insurance offers security and comfort but it can also be an employee benefit that can help as part of a wider benefits package to attract and retain staff as well as reward them.
Relevant life cover is a great employee benefit that gives employees the peace of mind that their family will receive a lump sum if they pass away or are diagnosed with a terminal illness.
For the employer, relevant life cover is not only a good benefit, but it is also a tax-efficient cover for both the employer and employee. We have explored some of the policies available to see what they offer.
The table below gives a quick comparison of the top UK providers for relevant life insurance.
| Company | Minimum cover | Maximum cover |
|---|---|---|
| Aviva | Not stated | No maximum |
| AIG | Not stated | 35 x income |
| Zurich | Not stated | 30 x total remuneration |
| Ageas | Not stated | Not stated |
| LV= | Not stated | £10 million |
| NFU Mutual | Not stated | Not stated |
| Legal & General | Not stated | Not stated |
| London General Insurance | Not stated | Not stated |
| Vitality | Not stated | Not stated |
| Scottish Widows | £25,000 | £25,000,000 |
| Aegon | Not stated | £3.5 milion |
| Royal London | Not stated | Not stated |
* The facts and figures included here come from each company’s website and were accurate at the time of writing (March 2019) but may have since changed. Also, please keep in mind these may not be apples to apples comparisons as each provider offers different solutions. This guide should be used as a starting off point for more research on your part.
Below we profile each of the companies’ services and features in a bit more detail.
Topics
1. Aviva
Some of the features and benefits of Aviva’s relevant life cover.
- Options include Life with or without employee significant illness cover
- Flexible cover amount
- Choice of the policy term
- Can also include total permanent disability cover
- Able to increase cover
- Immediate application decision available
- Has an enhanced Business Protection Promise
- Simple claims process
- Dedicated UK-based claims team
- Benefits the employee covered
Aviva provides relevant life cover that is available only through brokers and not direct. This cover is designed to benefit the employee covered. They provide cover that is flexible and can include additional cover. The cover amount and length of the policy term are flexible and are the choice of the client.
Aviva’s relevant life cover can also include total permanent disability cover and the cover can be increased. They offer a quick decision process and simple claims process that allows claims to be made online, over the phone and through the post with their UK-based dedicated claims team.
2. AIG
Some of the features and benefits of AIG’s relevant life cover.
- Death in service benefit for employees
- Based on an individual employee
- Pays out to the employee or their beneficiaries
- Covers death and terminal illness
- Tax efficient for both the employer and employee
- An alternative to group life insurance to cover individuals or to top up group life insurance
- Amount of cover can be adjusted during the policy
- The length of the term can be altered during the policy
- Transferable to a new employer or the employee
- Can be purchased direct or through a broker
AIG provides insurance direct or through intermediaries. Their relevant life insurance cover is designed as an employee benefit that gives them death in service cover. This is intended as an individual policy and as an alternative to group life insurance cover although it can be used to top up group life insurance for particular individuals.
AIG’s relevant life insurance is flexible and can be adjusted at any point during the term of the policy which includes the amount of cover and length of the policy. The policy can also be transferred to a new employer or to the employee.
3. Zurich
Some of the features and benefits of Zurich’s relevant life cover.
- Designed for smaller businesses not suitable for group life insurance
- Individual cover for death and terminal illness
- Cover whilst under the company’s employment
- Tax efficient for businesses
- Can be used as an extension to the group life insurance to give extra cover
- Helps employees with substantial pension funds
- Choice of cover
- Ability to change the cover during the policy
- The cover can be linked to the employee’s mortgage
- Can be transferred to a new employer or to the employee
Zurich provides a wide range of business insurance which includes relevant life and group life insurance. Their relevant life insurance provides individual insurance cover for death in service and terminal illness cover. It is designed for smaller businesses that are not suitable for group life insurance or to top up group life insurance for individuals.
Zurich’s relevant life insurance is tax efficient for employers and can help employees with substantial pensions funds. Their cover is flexible and enables employers to change the cover during the policy term as well as transfer the policy to a new employer or the employee if they leave.
4. Ageas
Some of the features and benefits of Ageas’ relevant life cover.
- Personal accident insurance that includes death in service benefit
- Protection for employee’s family if they are injured or die
- Weekly payments to employees injured at work
- Supports businesses in terms of expenses to replace the employee
- Allows businesses to do the best for their employee
- Can form part of an employee benefit package
- Can supplement permanent health insurance cover
- Dedicated personal accident claim line
- Also covers loss of key employees, recruitment and employer liability
- Only available through a broker
Ageas does not offer relevant life insurance as a standalone product, but it does offer it as part of their personal accident insurance. Their personal accident insurance not only gives the employee protection, but it also gives the employer protection and support when a key person is injured or dies.
Ageas’ personal accident insurance covers paying the employee whilst off work as a result of an accident and a lump sum to the family if the employee dies whilst in service. Employers also benefit as it covers recruiting and training a new employee, overtime funding to cover the employee’s work, business interruption protection, loss of key employee protection, and employer’s liability.
5. LV=
Some of the features and benefits of LV=’s relevant life cover.
- Covers death in service or diagnosis of a terminal illness
- Cover up to £10 million
- Tax-deductible business expense
- The payout is usually exempt from inheritance tax
- The payout must be written into a discretionary trust
- Once issued the plan can’t be changed
- Suited to businesses that are too small for group life insurance
- Can be used to top up group life insurance for individuals
- Not available to sole traders or partnership companies
- Product only available to advisers and not direct
LV=’s relevant life insurance is only available through advisers. Their policy allows cover up to £10 million for death in service cover and on the diagnosis of a terminal illness. Once set up the policy plan can’t be changed, and it has to be set up in a discretionary trust.
LV=’s cover aids both employers and employees as it is a tax-deductible expense and it is normally exempt from inheritance tax. It is most suited to small businesses not eligible for group life insurance, although it is not available to sole traders or partnership companies. It can, however, be used to top up group life insurance for individual employees.
6. NFU Mutual
Some of the features and benefits of NFU Mutual’s relevant life cover.
- Death in service benefit for employees
- Lump sum on death or diagnosis of a terminal illness
- Attractive part of an employee benefit package
- Alternative or supplement to group life insurance
- Tax efficient for businesses
- Typically free from inheritance tax
- The cover can be altered under certain circumstances
- Policy can transfer to a new employer or the employee
- Offer a range of related products
- Provided in partnership with AIG
NFU Mutual offers relevant life insurance but they do this in partnership with AIG to provide an attractive employee benefit. Their cover gives the employee peace of mind that their family will be provided for with a lump sum in the event of their death or on being diagnosed with a terminal illness.
NFU Mutual’s relevant life insurance is tax efficient for employers and is generally free from inheritance tax for the beneficiary/s. The policy once set can only be amended under certain circumstances although it can be transferred to a new employer or to the employee if they leave their current employment.
7. Legal & General
Some of the features and benefits of Legal & General’s relevant life cover.
- Individual death in service cover
- Includes pay out on the diagnosis of a terminal illness
- Paid by the employer
- Good employee benefit
- Suited to smaller businesses not able to have a group life cover
- Ideal for Directors who want to cover
- Useful cover for high earners as it doesn’t add to the lifetime allowance
- Tax efficient for businesses
- Not available to sole traders or partnerships
- Cheaper than a life policy
Legal & General offers a wide variety of insurance products which includes relevant life cover. Their relevant life plan is designed for smaller businesses that are unable to take out group life cover or for key individuals in a business that you want to offer cover to as an employee benefit.
Legal & General does not offer the relevant life cover to businesses that do not have an employer, so this excludes sole traders, partnerships or equity members. It offers employers a tax efficient benefit and the employee covered benefits as their family will receive a lump sum, but it won’t impact on their lifetime allowance like other cover.
8. Royal London
Some of the features and benefits of Royal London’s relevant life cover.
- Death in service cover
- Covers diagnosis of a terminal illness
- Available for both employees and directors
- Beneficial for small businesses that can’t warrant group life cover
- Includes Helping Hand to give access to recruitment and legal helplines
- Access to a dedicated nurse to support families through difficult times
- An employee benefit that gives peace of mind
- Non-taxable benefit for the employee
- Cost efficient as an allowable business expense
- Only available through a financial adviser
Royal London’s relevant life plan caters for businesses that can’t warrant taking out a group life cover. Their relevant life plan is suitable for employees and directors in giving them peace of mind that their family will receive a lump sum in the event of their death or being diagnosed with a terminal illness.
Royal London’s relevant life plan is a great employee benefit that is a non-taxable benefit which is cost efficient for the employer as it is an allowable business expense. Their plans have some additional benefits which include their Helping Hand service allowing clients access to recruitment and legal helplines and a dedicated nurse to help support families.
9. Vitality
Some of the features and benefits of Vitality’s relevant life cover.
- Death in service style of cover
- More tax efficient alternative to traditional death in service cover
- Can save up to 50% in tax to a standard life policy
- Option to include exclusive discounts and rewards to enhance your employee benefits package
- Suited to businesses that want to offer cover to key people
- Available to company directors
- High earners benefit as it doesn’t count towards their Lifetime Allowance
- Ideal for small businesses
- The lump sum is exempt from income or inheritance tax
- Can be used as a top up to death in service benefit or group life cover
Vitality offers a range of life insurance products which include relevant life cover which is a type of death in service benefit that is more tax efficient than some traditional death in service cover as the lump sum paid out is exempt from income or inheritance tax. It also doesn’t count towards Lifetime Allowance so is a good solution for high earners.
Vitality’s relevant life cover is suitable for small businesses or businesses that want to offer cover to key employees or company directors and want a tax efficient benefit. It is also a way of topping up death in service benefit or group life cover.
10. Scottish Widows
Some of the features and benefits of Scottish Widows’ relevant life cover.
- Individual death in service benefit
- Alternative to a group life scheme
- Can have up to 25 people under one plan
- Transferable with the employee when they move jobs
- Choice of level of cover or increasing cover
- Terminal illness cover included as standard
- Offers free accidental death cover whilst the application is being processed
- A minimum cover of £25,000
- Tax efficient so can be counted as a business expense
- Available through financial advisors
Scottish Widows provides a wide range of insurance products including relevant life insurance that gives individual employees a death in service benefit to enhance their employment package which includes terminal illness cover. Scottish Widows allows businesses to purchase cover for up to 25 people under one plan which makes it a good alternative to group life cover for businesses that can’t take out group cover.
Scottish Widows’ relevant life cover is flexible and offers either a fixed level of cover or increasing cover that starts at £25,000 and can go up to £25 million depending on your plan type. Their cover is available through financial advisors only.
11. Aegon
Some of the features and benefits of Aegon’s relevant life cover.
- Tax-efficient individual death in service benefit for employees
- Immediate cover up to £3.5 million
- Offers a range of guaranteed insurability options
- Signature free online applications
- Choice whether to be a corporate trustee or not
- Portable policy when employees move jobs
- Employees must be over 18 and under 75 years old
- Choice of cover – level, reducing, increasing and renewal options
- Suitable for a range of businesses and their employees including smaller businesses
- Can be used to top up group life insurance
Aegon is a global financial service organisation providing savings, investments, pensions and protection products which includes relevant life cover. They provide individual relevant life policies for employees that can be used as a tax-efficient employee benefit that can top up group life insurance. It is suitable for a range of businesses from small businesses.
Aegon’s relevant life cover is available to employees aged 18 to 75 years old and it can provide cover up to £3.5 million. They offer guaranteed insurability options where the benefit amount can be increased. Cover can be provided on a fixed level, reducing cover, increasing cover or renewal basis without providing further medical evidence.
12. Royal London
Some of the features and benefits of Royal London’s relevant life cover.
- Tax-efficient death in service benefit
- Suitable for small businesses upwards
- Can be used to top up group life schemes
- Designed for individuals
- Provides a lump sum
- Can payout if diagnosed with a terminal illness
- Includes Helping Hand service
- Access to recruitment and legal helplines
- Dedicated nurse to support the person covered and their family
- Only offered through an independent financial advisor
Royal London is mutual life, pensions and investments company who offer a range of insurance products which include relevant life plan. Their relevant life plan is suitable for small businesses that are too small for group schemes and high earners that want to top up their group life cover.
Royal London’s relevant life plan provides a lump sum payout and can payout if diagnosed with a terminal illness. They include the Helping Hand service which gives access to recruitment and legal helplines as well as a dedicated nurse to support the insuree and their family during a difficult time.
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