A relevant life policy is priced the same as personal life cover by providers, it is who pays the premiums, and the tax treatment of premiums, that derives the cost savings. There is no additional charge by insurers for having a relevant life cover.
Life cover is a relatively inexpensive form of protection. The premium will be dependent on normal underwriting factors such as age, smoker status, and condition of health. Alternatively, a level of cover can be determined based on affordability of premium.
An independent financial adviser can assess your protection needs, and research the whole of the market, to provide you with an indicative cost assuming acceptance, usually at no cost.
The cost savings of a relevant life policy over paying for life cover personally
Ordinary life cover paid personally
Assuming that you are paying life cover personally of £100 per month, and you are a higher rate tax payer 40%, then the real cost to you as an individual with tax and national insurance is £172.42 per month.
But the employer incurs costs and savings as well, and so add to this the employer’s national insurance of £23.79 but with a corporation tax saving of £37.28 then the combined cost is £158.93 per month.
Relevant life cover paid by the company
Again, assuming the same situation but with the cover being a relevant life policy then with corporation tax relief then the net cost is £80 per month.
This is a real overall saving of £77.93 per month or 49%.*
*This example assumes income tax, national insurance for the tax year 2013/14, and that corporation tax applicable to the company is 20%