Relevant life insurance for husband and wife directors
Many small limited companies are run by married couples or civil partners.
Sometimes both spouses are directors. In other businesses, one director is actively involved while the other helps with administration or company management.
If that’s your situation, you may be wondering whether both of you can have relevant life insurance.
In most cases, the answer is yes.
Each eligible director can usually have their own policy, provided they satisfy the insurer’s eligibility and underwriting requirements.
If you’re new to relevant life insurance, start with our guide to what relevant life insurance is.
Husband and wife directors can normally each take out their own relevant life insurance policy through the same limited company. Each policy is assessed individually and can provide different levels of cover depending on the director’s age, remuneration and personal circumstances.
Can both directors have a policy?
Yes.
A relevant life policy is arranged for an individual employee or director.
Where both spouses work for the company and meet the eligibility requirements, each can normally have their own policy.
The company pays the premiums for each policy, while the cover is written on the life of the individual director.
You can read more about eligibility in our guide to who can take out a relevant life policy.
Do both policies have to be the same?
No.
Each policy is underwritten separately.
That means one director may have:
- a different level of cover
- a different policy term
- a different premium
For example, one spouse may earn a higher income or have greater financial commitments.
The level of protection doesn’t have to match.
How is the amount of cover calculated?
Insurers normally assess each director individually.
They’ll typically consider:
- age
- remuneration
- medical history
- the insurer’s underwriting limits
Even where both directors own the same company, one may qualify for a different maximum level of cover than the other.
For more information, see our guide to how much relevant life insurance you need.
Can each director choose different beneficiaries?
Yes.
Each relevant life policy is normally placed into its own discretionary trust.
Although many married couples name each other as beneficiaries, the trust arrangements can differ from one policy to another.
Each director should decide who they would like the trustees to consider if a claim arises.
Our guide to trusts and relevant life policies explains how these arrangements work.
What if one spouse doesn’t work in the company?
Relevant life insurance is designed for employees and directors.
If one spouse isn’t employed by the company and isn’t a director, they generally wouldn’t be eligible for their own relevant life policy through that business.
Personal life insurance may be more appropriate in those circumstances.
Can one spouse have more cover than the other?
Absolutely.
There’s no requirement for both policies to provide the same level of protection.
One director may have:
- a larger mortgage
- higher earnings
- different family responsibilities
- other existing life insurance
Each policy should reflect that individual’s circumstances rather than aiming for identical levels of cover.
Does each director go through underwriting?
Yes.
Even if both policies are arranged at the same time, each director completes their own application.
The insurer assesses each person separately.
One application may be accepted immediately, while the other could require further medical information.
You can read more in our guide explaining how the underwriting process works.
Are the premiums tax efficient?
Where the normal conditions for relevant life insurance are met, premiums are often treated as an allowable business expense for corporation tax purposes.
The exact tax treatment depends on the individual circumstances and current tax rules.
For more information, see:
Example
Mark and Sarah own a consultancy through a limited company.
Both are directors and both receive remuneration from the business.
Mark has a larger mortgage and wants enough cover to protect the family’s finances if he dies unexpectedly.
Sarah already has separate personal life insurance and requires a lower level of additional protection.
Although the company arranges both policies, each director has their own application, underwriting assessment, trust and level of cover.
Frequently asked questions
Can husband and wife directors both have relevant life insurance?
Yes. In most cases, each eligible director can have their own relevant life policy.
Do both policies have to be with the same insurer?
Not necessarily. Depending on the circumstances, the policies may be arranged with the same insurer or with different providers.
Can one policy cover both directors?
No. Relevant life insurance covers one individual. If both directors want protection, they would normally each have their own policy.
Can the company pay both premiums?
Yes, provided the policies satisfy the relevant qualifying conditions.
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