Many new business owners focus on growth, customers, branding, and funding, but forget to protect themselves and their families. This leads to a common and potentially costly mistake – they wait too long to put life cover in place.

And when they do, they often don’t realise they can put it through their business and claim the premiums as a business expense. The one policy every new business should consider early isrelevant life insurance.

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Why new business owners often delay business life insurance

Launching a business is a demanding and exciting time. Most founders assume they will look at business life insurance, when the business is more established. Others believe they should buy personal life insurance rather than have cover paid for through the company.

This creates several problems:

• Directors miss out on significant tax advantages
• Premiums become more expensive as people age
• Families are left financially exposed
• The business lacks a structured benefits package for future staff

Relevant life insurance solves these issues from day one.

What is relevant life insurance?

Relevant life insurance is a policy paid for by the business that provides a tax-free payout to an employee’s or director’s family if they die while employed.

The policy is written in trust, which means the money goes directly to the beneficiarieswithout forming part of the estate.

It works like personal life cover but is usually far more tax-efficient because the business pays the premiums and can often treat them as an allowable business expense.

Why this policy matters so early in the life of a business

It protects families from day one

Founders typically take financial risks when starting a business. They may invest personal funds, reduce salary, or rely on savings. If something happens to a founder during these early stages, their family could face significant financial pressure. Relevant life insurance provides immediate financial security.

It helps directors reduce their personal tax burden

Buying personal life cover means paying premiums from income that has already been taxed. Relevant life insurance removes that burden. Because the business pays the premiums, directors keep more of their own income while still receiving the same level of protection.

It lays the foundation for a strong benefits package

As the business grows, recruitment becomes essential. Offering relevant life insurance shows potential employees that the company values wellbeing and long-term support. For early-stage firms that cannot yet offer large salaries, this benefit creates a real advantage.

It supports long-term planning

New businesses evolve quickly. Having relevant life insurance in place early makes it easier to add more policies later, such as group life insurance, critical illness cover, or income protection. It sets a professional tone for future growth.

HMRC doesn’t treat premiums paid by the employer as a P11D benefit. For a higher rate taxpayer in a small company this can reduce costs by up to a third according to estimates from Royal London.

An example

Imagine a director who starts a consultancy. They invest personal money into the business and pay themselves modest salaries while revenue builds. Without relevant life insurance, if the director passed away unexpectedly, the family could be left without protection.

With relevant life insurance in place from the beginning the family receives a tax-free lump sum.

The difference can be life-changing.

How relevant life insurance works

• The business arranges the policy
• Premiums are paid by the company
• The policy is written in trust to ensure an efficient payout
• If the insured person dies, their family receives a tax-free lump sum
• The cover stays in place as long as the individual remains an employee

It is simple to set up and provides significant peace of mind.

Conclusion

New business owners often focus on growth and overlook protection, but relevant life insurance is one policy that should not wait.

It protects families, saves tax, strengthens recruitment, and supports long-term planning. Most importantly, it ensures that the people building the business are protected from the very beginning.

If you are launching a company or are already in the early stages of growth, now is the right time to explore relevant life insurance. By getting in contact with a specialist from IGotCover, you can help secure a suitable policy and avoid the mistake many new businesses make.

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