How to set up relevant life insurance

Arranging a relevant life policy is straightforward, but there are a few key steps to get right — particularly around the trust and tax treatment. Here’s how the process works from start to finish. For background, see what is relevant life insurance? or review our 12 key facts guide.

1. Decide how much cover you need

Start with the amount your family or dependants would require if you died during the policy term. Many directors base this on a multiple of annual income (for example, 10–25× salary or dividends) or enough to clear outstanding mortgages, loans, and provide ongoing financial support. You can estimate cover using the relevant life calculator.

2. Compare insurers and premiums

Use an adviser such as Broadbench to compare providers and policy terms. Each insurer has different limits on the amount of cover, maximum age, and medical underwriting requirements. Broadbench can confirm which providers accept company-paid policies and handle the paperwork for you. For tax guidance, see tax benefits of relevant life insurance.

3. Complete the application and medical questions

Directors complete a short online or paper application with personal and medical details. For larger sums assured, insurers may request a nurse screening or GP report. Once underwriting is complete and the insurer is satisfied, the policy terms are confirmed. Read more about who can take out a relevant life policy.

4. Put the policy in trust

Every relevant life plan must be written under a discretionary trust. This ensures that if a claim is made, the payout goes directly to your chosen beneficiaries rather than to the company or your estate. Broadbench will prepare the trust documents for you to sign electronically or in print. Learn more about trusts and relevant life policies.

5. Start the policy and set up payments

Once the trust is signed and approved, the policy goes live. The company pays the premiums monthly or annually from its business account. Premiums may be deductible for corporation tax purposes if the policy is provided wholly and exclusively for business reasons — see is relevant life a business expense?.

To discuss suitable cover levels or check eligibility, use the free quote form to contact Broadbench, or visit the FAQs for common setup questions.