Small firms set to take advantage of life cover policies

‘Relevant Life Plans’ offer economic means of covering employees


Many small businesses do not offer life assurance to staff, despite the existence of new policies which would enable them to affordably cover employees if utilised, according to accountancy firm Smith & Williamson.

A ‘relevant life plan’ policy provides a payout in the event of a director or employee’s death-in-service, with the sum paid typically 10 to 25 times an individual’s employment package. The schemes are available to employers but the self-employed, partners or equity members of limited liability partnerships are excluded. The policies are backed by the Treasury, who offer tax relief to employers utilising the schemes. According to Martyn Cross from Smith and Williamson, this has the effect of making the plans significantly cheaper to adopt compared to traditional life insurance schemes. Martyn Cross commented: These policies are little known, but are potentially highly valuable for directors and employees of thousands of smaller companies up and down the country. For years, smaller businesses were unable to offer death-in-service policies to directors and staff as they were simply uneconomic. However, the introduction of these plans and the availability of tax relief make them worthwhile. While we all hope that we won’t need such policies, they can prove invaluable if the worst happens.”

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