Relevant life policies have clear eligibility rules. The short version: you need to be an employee, and directors count as employees for this purpose.
Ltd directors
Eligible
Including sole directors
Contractors (PSC)
Eligible
Via your limited company
Sole traders
Not eligible
No employer-employee link
Typical ages
17-73
Cover can run to 75
You can usually take one out if you are:
- A director of a UK limited company (including sole directors of personal service companies)
- An employee of a UK limited company
- A salaried partner in a limited liability partnership
- A contractor operating through your own limited company
You cannot take one out if you are:
- A sole trader, there is no separate employer to own the policy
- An equity partner in a traditional partnership
- Not employed by the company paying the premiums
Husband-and-wife companies can each hold their own policy, doubling the household tax efficiency.
Age and cover limits
Most insurers accept applicants from 17 up to around 73, with policies typically able to run to age 75. Maximum cover is usually expressed as a multiple of total remuneration, commonly up to 30 times for younger applicants, reducing with age. Dividends from your own company normally count towards remuneration.
Husband and wife companies
Where both spouses are directors of the same company, each can have their own relevant life policy, doubling the household tax efficiency.
This page is for information only and does not constitute financial advice. To confirm your eligibility, speak to a qualified financial adviser.
How the policy is structured for eligible applicants
Once eligibility is confirmed, the policy is written on a “life of another” basis: the company takes out and owns the policy on the life of the director or employee, and it is placed into a discretionary trust from the outset. This structure is what HMRC requires to treat the arrangement as a genuine business expense rather than a personal benefit, it is not a paperwork formality that can be added later.
Salaried partners in an LLP are eligible in the same way as directors and employees, provided the LLP is the entity paying the premiums. Equity partners are not, because there is no employer-employee relationship for the policy to sit on top of.
Health and underwriting still apply
Meeting the structural eligibility rules above does not guarantee cover, insurers still assess health, occupation and lifestyle in the normal way. Multiple directorships or employment across several companies do not disqualify you, but the policy must be taken out by the company that genuinely employs you and benefits from the cover.
What insurers look for beyond eligibility
Once the structural rules are met, insurers assess the application on its own merits, in the same way as any life insurance underwriting: current health, medical history, occupation and, for higher levels of cover, sometimes income evidence. None of this changes the eligibility rules above, it simply determines the terms, and occasionally the premium loading, that are offered once eligibility is confirmed.
Who is not eligible, and why
The eligibility rules follow one principle: there has to be a genuine employer-employee relationship for the policy to sit on. That rules out sole traders and ordinary partners in a partnership, because they are not employees of anything, there is no employer to own the policy or claim the premium as a business expense. Equity partners in an LLP are in the same position. Someone who takes only dividends and holds no employment contract or salaried directorship is a grey area rather than a clear no: the arrangement can be challenged if there is no remuneration for the cover to relate to.
Contractors and personal service companies
A contractor operating through their own limited company is usually eligible, because they are an employee and director of that company. The company pays the premium and owns the policy. Where this gets more complicated is IR35 status and short-lived companies, if the company is wound up, the policy ends with it unless it has been reassigned. Contractors moving between engagements should check the reassignment terms before taking cover out, not after.
Multiple companies and multiple policies
Holding directorships in several companies does not disqualify anyone, but each policy has to be taken out by a company that genuinely employs the person and has a real reason to provide the cover. The remuneration used to justify the cover multiple should come from the company paying the premium. Stacking several policies across companies on the same underlying income is the pattern most likely to attract scrutiny.
What eligibility does not decide
Passing the eligibility rules confirms the arrangement can exist. It does not confirm the cover level, the price, or the terms. Those come from underwriting, health, medical history, occupation, and for larger sums assured, sometimes financial evidence. It is entirely normal to be eligible on the rules and still be offered cover on non-standard terms, or a lower sum assured than requested. Eligibility and acceptance are two separate gates.
Related guides
- Do I Qualify for a Relevant Life Policy?
- Tax Benefits of a Relevant Life Policy
- What Is a Relevant Life Policy?
- How to Set Up a Relevant Life Policy
Check in 30 seconds
Four quick questions give you an instant indication of eligibility.