A Relevant Life Insurance Policy is a tax-efficient way for employers to provide life cover for a single employee, typically as an alternative to a group death in service scheme.

The policy pays out a lump sum if the employee dies — or, if chosen, is diagnosed with a significant or terminal illness — while employed. Premiums are usually treated as an allowable business expense, and the benefit is paid to the employee’s nominated beneficiaries through a discretionary trust, meaning it normally falls outside of their estate for inheritance tax purposes.

This makes it a cost-effective and compliant solution for small businesses, company directors, or employees who don’t have access to a wider group life scheme, offering protection for their families without creating additional personal tax liability.