Tel: 01403 780 770

Building and protecting your wealth

Relevant Life Plans – Things You Should Know

Relevant life plans pay out a lump sum to your employee’s family if they’re employed when they die while the plan is in place. If you’re new to relevant life plans, there are a few things to know.

This does not constitute advice and advice should be sought in all instances before acting on it.

According to a 2019 National Statistics estimate, small to medium-sized enterprises (SMEs) consisting of 0-249 employees make up 99.9% of the country’s 5.9 million businesses. Businesses with 49 employees or less are classified as “micro-enterprises” and represent 99.3% of that percentage.

This is important for your business because, in order to get life insurance for your company, many insurers require you to have at least five employees. 

We can deduce that many small companies won’t qualify for cover. But there is an option available so you can provide death-in-service benefits for your employees in a tax-efficient way.

As well as a lump sum payout to an employee’s family, some policies might even allow a payout if the employee is diagnosed with a terminal illness (life expectancy of less than 12 months) which could be a huge help in someone’s final days.

If you’re new to relevant life plans (RLP), here are a few things to know:

They’re transferrable
RLPs can move with the employee, providing a way for your employees to retain coverage after they move on to another job. Their new employer might even want to take over the policy or the employee can request a change to personal cover within a certain timeframe. Many providers even have the option to request personal cover at any time and some policies even have additional benefits like allowing terminal illness to continue with their personal plan.

They’re tax-efficient
There’s no need for the beneficiary of the plan to pay income tax on the benefits as it’s not treated as a benefit-in-kind. And under normal circumstances, the benefits aren’t subject to inheritance tax, either. This is especially great if you struggle with Lifetime Allowance because benefits paid from a relevant life plan are not included in an employee’s lifetime allowance for pension benefits.

As a bonus, the premiums you pay on the plan may be classed as an allowable company expense (as it is ‘wholly and exclusively’ for your business) when it comes time to calculate your tax liabilities. Plus, neither you nor your employees need to pay National Insurance on the policy’s premiums.

How cover is calculated
Like a traditional death in service policy, the guaranteed sum with a relevant life policy is also based on multiple salaries. The standard practice when calculating maximum cover amounts is to use the maximum multiples of salary, depending on the age of the insured. It includes salary, regular dividends paid in lieu of salary, and any benefits-in-kind.

Is a RLP right for you?

If you’re the owner of a small business and want to learn more about relevant life plans and how you can incorporate this employee benefit in your overall business plan, don’t hesitate to get in touch with us today. We can help you find the right plan that balances your employees’ needs with your own, and doesn’t break the bank.

Want help with your business plans?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


Follow us on for regular financial and mortgage updates

Twitter                     LinkedIn

If you found this article interesting, why not share it?

Meet the Advisers

With over 20 years experience our advisors can help you meet your business and personal goals.

Who we Help

All our clients are doctors and dentists, just like you. As specialists we know your industry inside out.

Info & News

Make this the place you visit to keep up to speed with financial news for your sector.

Contact Us

Wherever you are in the UK we can help you build and protect your wealth.

Get Connected

to our specialist team

Tel: 01403 780 770

Keep Updated

Simply register your name and email below and receive our updates direct to your inbox

Dental & Medical Financial Services News Updates

Just for doctors and dentists

Read more news


Dental and Medical Financial Services is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority. Company registered in England no. 9158580 Registered office: 1 Market Square, Horsham, West Sussex, RH12 1EU

© 2014 Dental & medical Financial Services. All rights reserved. Website design by Goldmine Media.