Individual Protection from AIG

relevant life insurance

Relevant life insurance is an insurance policy that a business can take out to provide life insurance for an individual employee. It’s an alternative way for employers to provide death-in-service benefits for their employees outside of a registered group life scheme.

Why recommend relevant life insurance?

Relevant life insurance is applied for and paid for by the business. It is written into trust so it pays out a lump sum to the employee or their beneficiaries if they die or are diagnosed with a terminal illness while employed during the policy term. It complies with relevant life insurance legislation that makes it tax-efficient for the employer and employee; as a consequence it provides pure life insurance only, and no other financial benefits.

Who is relevant life suitable for?

  • Those who run or work for a business that does not provide a group life insurance scheme (perhaps because it is too small to qualify for one), but would like the business to arrange life insurance as an employee benefit in a tax-efficient manner for themselves or another individual employee;
  • Those who run or work for a business which does provide a group scheme, but would like to arrange additional life insurance that doesn’t count towards any annual or lifetime pension allowances (this may be of particular interest to high-earning employees who may be near their pension limits);
  • Those who otherwise want the business to top up the life insurance benefits employees get from their group scheme: a group scheme usually only covers up to 4 x salary, whereas AIG Relevant Life Insurance can cover up to 35 x salary, depending on age. 

What are the advantages?

  • It’s tax-efficient for the employee as HMRC usually views the premiums as an allowable business expense for the employer and not a benefit-in-kind for the employee. The employee, therefore, does not have to pay income tax or national insurance on the premiums - for a higher or additional rate taxpayer, this can be a significant saving.
  • It’s tax efficient for the beneficiaries as any payout will be received free of income tax and, usually, inheritance tax liability because the policy is written into a split trust. In addition, any payout does not count towards the employee’s lifetime pension allowance as it is a ‘non-registered’ arrangement.
  • It is tax-efficient for the business as the employer can claim tax relief on the premiums as long as the local inspector of taxes is happy that the premiums are ‘wholly and exclusively for the purpose of trade’ as part of the employees remuneration. In addition, the benefits are written into trust on behalf of the employee so they are not viewed or taxed as business assets.

Limits of the policy

Product features and limits

Min/max age at entry


Max age at expiry


Min/max term


Minimum sum assured


Maximum sum assured

Maximum is linked to life assured’s salary. There is no statutory limit on the level of cover that can be provided so AIG have set its limits as: 35 x salary* for ages 17-29, 30 x salary* for ages 30-39, 25 x salary* for ages 40-49, 20 x salary* for ages 50-59, 15 x salary* for ages 60-71 *this includes salary, bonus, plus any taxable benefit in kind.

Cover variant available

Level. Cover remains level throughout the term unless the indexation option is taken up. Increasing. The sum assured will increase in line with the Retail Price Index (RPI) up to 10% every year and premiums will also increase each year.

Additional features

Guaranteed Insurability Options; It allows to increase the amount of cover by up to 50% of the original sum assured (up to a maximum of £75,000) without any further medical underwriting if the person covered: 

  • gets a pay rise. 
  • gets married or enters a civil partnership or 
  • has (or adopts) a child or 
  • increases their mortgage amount or term

Flexible options

Your client can:

  • Reduce the sum assured;
  • Reduce the term;
  • Change how often premiums are paid;
  • Increase the term of the cover;
  • Stop and start annual increases;
  • Increase the sum assured;
  • Increase the sum assured and the term of the cover at the same time; and
  • Transfer to a new employer or transfer of ownership to the employee (conditions apply).

For a full explanation of AIG Relevant Life Insurance please see our Relevant Life Insurance Cover Details.

Literature and support materials


Relevant Life Insurance Key Facts

Key Facts document

Reasons why – AIG Relevant Life Insurance

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