What is Zurich Relevant Life?
Relevant life cover offers a tax efficient way for an employer, usually a small business, to provide life cover for an employee. It is designed to help protect their family against the impact of their death or diagnosis with a terminal illness whilst they're employed.
Why Zurich Relevant Life?
Relevant life cover may be suitable if:
- The employer has a small business without enough employees to set up a group life scheme.
- The employer wants to provide death-in-service benefits to their employees that exceed those payable under the main company scheme.
- The employees have substantial pension funds and don’t want their death-in-service benefits to form part of their pension lifetime allowance, or for premiums to impact their protection from the lifetime allowance.
We’ve built our relevant life protection in a way that lets the employer choose the cover their employee needs, and change it when their employees’ lives change.
Summary of cover
Relevant Life cover
- No assessment of premiums on the employee as benefit in kind or otherwise
- Premiums paid by the employer are usually viewed as an allowable business expense by HMRC
- Premiums and any benefit paid are eligible for relief from;
- Income tax
- Corporation tax
- National Insurance contributions
- Benefits do not count towards the lifetime allowance for pension purposes
- In most cases benefits are paid free of inheritance tax
- Our policies are portable, should the employee leave their current employer they are able to continue the policy in their own name
Whether or not your business clients currently have life assurance, now could be the perfect time to review their situation to see if a relevant life policy would be suitable.
Choose the cover that’s right for your business client’s employees
- Monthly or annual premiums
- Guaranteed premiums (unless cover changes or increases)
- Choice between level, decreasing or increasing cover
- Increasing cover options of 3%, 5% or RPI
- Choice of decreasing interest rate between 2% and 18% (at 2% intervals)
Details of cover
Who can take out the policy?
The policy can only be taken out by the employer, who can be:
- A sole trader with employees
- A partnership
- A limited liability partnership
- A limited company
- A charity
Who can the policy cover?
- One employee, including: company directors (including shareholding directors) and company officers
- Minimum age at entry 16
- Maximum age at entry 73
- Maximum age at end of term 74
- Minimum term 1 year
- Maximum term 50 years
- Minimum premium £5 a month or £50 a year
- UK resident
Benefits Description Decreasing cover The employer can choose to have their employees cover reduce in line with their mortgage. They can choose a decreasing interest rate between 2-18% at 2% intervals. This can be adjusted at any time. Free life cover during underwriting Cover for up to £2,000,000 during underwriting.
The maximum sum assured will be limited to the life assured’s total remuneration.
Age Total remuneration Age 16-39 30 x total remuneration Age 40-49 20 x total remuneration Age 50 onwards 15 x total remuneration
Remuneration can include salary, bonuses, benefits in kind and dividends earned.
The policy can only be issued into a relevant life policy trust, which the employer will need to set up when they apply. The employee’s family or dependants can be beneficiaries.
We’ve made it possible for you to make changes without having to go through underwriting and asking questions about health, or changes in personal circumstances.
As an adviser you will have the ability to make changes to the relevant life policy. You can access this through our online adviser portal.
When significant events happen the milestone benefit can be used to increase the sum assured without answering any questions about the employees health. If your client uses the milestone benefit, their premiums will change.
Some of the significant events are listed below:
Take out a mortgage or increase the mortgage they already have
Get married or enter a civil partnership
Divorce, separate or dissolve a civil partnership
Become a parent
Starting a family
Get a pay rise of 10% or more
The maximum increase that can be made to the benefit amount is the lower of the original sum assured or £200,000.
This benefit must be used within 90 days of the significant life event and can only be used if the employee is 54 years old or younger.
- Increase the sum assured
- Increase the policy term
- Review the premium if the employee previously smoked
- Reduce the sum assured
- Reduce the policy term
- Remove increasing cover
- Change the rate on increasing cover
- Increase/reduce interest rate on decreasing cover
Continue relevant life cover with a new employer
The policy can remain in the relevant life policy trust when the employee starts a new job, providing the new employer agrees to take over responsibility for the policy and the trust. Terminal illness will continue to be provided but there must be no break in premiums between the old and new employer.
Transfer ownership of the policy to the employee
If the employee leaves the business and doesn’t move to a new employer, they can take over the policy and pay the premiums themselves. Terminal illness will not continue to be provided and there will also be tax implications. For more information, see the Relevant Life Policy: Technical Guide for Employers and Employees.
Zurich Support Services
Our relationship with your business client doesn’t begin and end with a medical crisis or a claim. They have access to Zurich Support Services, an independent team of counsellors, advisers and legal experts. They’re a phone call away whenever your business client – or member of their family – needs them.
Talk to the team about anything at any time
Your business client can talk to them about anything, from daily worries to major life events. Even if the team can’t help on the call, they can point them in the direction of someone who can. Here are just some of the things people pick up the phone to talk about:
- Looking for a job
- Paying back debts
- Managing household bills
- Checking consumer rights
Big life events
- Planning a wedding
- Facing separation or divorce
- Dealing with bereavement or loss
- Moving to a new house
- Coping with anxiety or depression
- Living with illness or disability
- Revisiting life goals
- Asking about therapy
- Dealing with pressure or stress
- Balancing work with a private life
- Facing bullying or harassment
- Understanding employment rights
Making a claim