Aviva relevant life: how company-paid life cover works
Aviva relevant life is a life insurance policy that a company buys for a director or employee, paying the premium from the business rather than from the individual's taxed income. We compare it with the rest of the market for you, at no extra cost.
The policy is written under trust and pays a tax-free lump sum to the family if the person dies during the term. This guide explains how Aviva relevant life works, who can have it, how the tax treatment compares with personal cover and how a broker compares Aviva with Royal London, Legal and General and other insurers.
What is Aviva relevant life insurance?
A relevant life policy is an individual term life policy owned and paid for by an employer. It covers one named person, such as a company director or a key employee, and pays a lump sum if they die within the term. Because the employer pays, it works as an employee benefit and sits outside a group scheme, so you can choose the cover and the person.
It is life cover only. There is no savings element and no cash-in value, and the policy normally ends at the end of the term or when the person leaves the company. Aviva is one of several UK insurers that offer relevant life cover through brokers, which is why it is worth comparing the policy terms rather than choosing on name alone.
How does Aviva relevant life work under trust?
A relevant life policy is written under a relevant life trust. The company pays the premium, the trustees hold the policy and, on death, the insurer pays the lump sum to the trustees, who decide how to pay the person's family or other beneficiaries. The trustees take into account the wishes the employee has recorded, but they make the final decision.
The trust is what keeps the money outside the person's estate for inheritance tax in most cases, and it also means the family can receive the payment without waiting for probate. A broker will help set up the trust documents so that the policy and the paperwork match.
Company pays
Premiums come from the business.
Trustees hold it
The policy sits in a relevant life trust.
Family receives
A lump sum is paid out through the trustees.
What are the tax benefits of relevant life cover?
The appeal of relevant life is the tax treatment. Premiums are normally treated as an allowable business expense for corporation tax, provided they meet the wholly and exclusively test. They are not normally treated as a taxable benefit in kind for the employee, and the company does not pay employer National Insurance on them. Compare that with paying for personal life insurance from your own taxed income, which means earning more to pay the same premium.
The tax rules are detailed and change from time to time, so speak to your accountant before you buy. This page is general information, not tax advice.
Who can have Aviva relevant life insurance?
Relevant life is available to employees of a company, which includes directors who are on the payroll. It is popular with owner-managed limited companies, small businesses and professional firms where there is no group life scheme, or where an individual wants cover that a group scheme does not provide. Self-employed sole traders and partners in a partnership are not employees, so they cannot normally use relevant life.
Cover can be set to match the person's needs, such as a multiple of salary, a family's income needs or a loan they have guaranteed. The insurer will ask about health, occupation and lifestyle, and the premium reflects age, cover amount and term.
How much does Aviva relevant life cost?
The cost depends on the person's age, health and smoker status, the sum assured and the length of the term. Premiums are paid by the company, and a younger, healthy person with a modest sum assured will pay far less than an older person with a large sum assured. Any price you see online is illustrative only, because the actual premium is set at the date of the quote.
Insurers price relevant life differently, so the cheapest provider for one person may not be the cheapest for another. We compare the market on your director's age, health and cover, so you see like-for-like quotes.
Relevant life or death in service: which is better for your business?
Death in service covers a whole group under one policy and suits businesses with several employees. Relevant life covers a named individual and suits a director or key person who is not part of a group scheme, or who wants a bigger sum assured than the group would offer. The two can sit side by side, and many companies use both.
The best choice depends on the number of people, the cost and what the business wants to achieve. We explain the options in plain English and can price both for comparison.
Death in service
One group policy, suits several employees.
Relevant life
A named individual, suits a director or key person.
Why use a broker for Aviva relevant life insurance?
A broker compares Aviva against the rest of the market, checks that the trust and the policy are set up correctly, and supports the company at claim time. Using a broker costs you nothing extra, because the commission is already built into the premium. For a company that wants to protect a director's family and keep the cost low, a comparison is well worth the few minutes it takes.
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This page is general information, not a personal recommendation. Policy terms, prices and tax rules change, so check the current documents before you decide.
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