Skip to content
Cromwell Associates

Business Protection

Relevant life cover for company directors, explained

What a relevant life policy is, how it is usually arranged, and a simplified way to compare funding it personally with funding it through a company.

Cromwell Associates editorial team · 7 min read · Reviewed September 2026

What a relevant life policy is

A relevant life policy is a single-life death-in-service arrangement that an employer takes out on an employee, including a salaried director. The employer owns and pays for the policy, and the benefit is normally written into a discretionary trust for the employee's family.

It is designed for businesses that are too small for a group scheme, or for a director who wants a benefit arranged separately from one. It is a protection arrangement, not an investment: there is no surrender value.

  • Taken out by the company on the life of an employee or salaried director
  • Benefit usually held in a discretionary trust for the family
  • Single life only — it does not cover business loans or share purchase
  • Eligibility depends on the individual, the company and the provider's terms

Why the trust matters

Because the policy is written in trust from the outset, the benefit is normally paid to the trustees rather than into the estate. The trustees then distribute it under the trust's terms and the letter of wishes.

How a trust interacts with an estate, and with inheritance tax, depends on how it is drafted and on individual circumstances. HMRC's guidance on trusts and taxes is a useful starting point, and a solicitor should confirm the position before anything is signed.

Comparing the cost fairly

The usual comparison made about relevant life cover is between funding a premium from money that has already been taxed personally, and funding it through the company. Whether that comparison holds in a specific case depends on the individual's tax position, the company's position, and whether the arrangement qualifies at all.

The tool below performs only that arithmetic, using figures you enter. It assumes nothing and it is not a quotation.

What to confirm before proceeding

Relevant life cover is not right for everyone, and the tax treatment is not automatic. These are the points a specialist and an accountant should confirm together, in writing, before any application is made.

  • Whether the arrangement meets the qualifying conditions in the individual case
  • How premiums would be treated for corporation tax and for the employee
  • The trust wording and who the trustees are
  • What happens if the director leaves, retires or the company is sold
  • The provider's underwriting terms, exclusions and the total cost

Illustrative comparison

A simplified cost comparison you can try with your own figures

This is arithmetic, not tax advice and not a quotation. It uses only the numbers you type in. Nothing is assumed for you: if you do not enter a percentage, no relief of any kind is applied. Whether any relief is actually available depends entirely on individual and company circumstances.

Enter a monthly premium and at least one percentage to see the comparison.

What this does and does not do. It is a simplified arithmetic comparison of two figures you have chosen. It is not current tax advice, not a quotation and not a statement that any saving is available to you. It ignores National Insurance, dividends, marginal relief, salary sacrifice, eligibility conditions, trust requirements and every other factor that decides how a policy is actually treated. Tax treatment depends on individual and company circumstances and can change. Please ask a suitably qualified specialist and your accountant to confirm the position before making any decision. Nothing you type here is saved, sent to us or attached to an enquiry.

Sources and further reading

No share trackers are used on this site.

Arrange a confidential consultation

Tell us what you would like to protect or resolve. One named contact will read your enquiry personally and come back to you.

  • One dedicated point of contact
  • No call centres
  • Introductions handled discreetly
  • Serving Hampshire, West Sussex, Surrey and the Isle of Wight

Cromwell Associates coordinates enquiries and introduces clients to appropriately qualified specialists. We do not provide regulated financial, legal or tax advice, and submitting this form places you under no obligation.

Your enquiry is reviewed personally before any introduction is made.

Please do not send medical details, account numbers or other sensitive information. Cromwell Associates is an enquiry and introduction service: it does not give advice, recommend policies or arrange cover. Insurance introductions are passed on by hand to a suitable specialist, and other services to an appropriate partner. Cromwell Associates may receive a referral payment if you go on to use a service.