If your limited company takes out relevant life insurance for you, the amount of cover available isn’t necessarily based on your PAYE salary alone.
This is important for company directors who take a relatively low salary and the rest of their income as dividends.
Some insurers will add up your total remuneration when calculating how much cover they can provide. This includes your salary, dividends, and any other benefits you receive from your company.
They also take into account your age – and the main insurers don’t all use the same limits
In this guide, we explain how insurers calculate relevant life cover limits, what counts as ‘remuneration’, and what financial information you’ll need to provide when setting up a new policy.
For an introduction to relevant life, read our guide to relevant life insurance for limited company directors.
How is the maximum amount of cover calculated?
Relevant life insurers commonly calculate the maximum cover they’re willing to provide as a multiple of your total annual remuneration.
The multiples usually decrease as you get older, as shown in the examples below (correct as of August 2026).
For example, Royal London currently allows relevant life cover of up to 30 times annual remuneration if you’re under 40. This drops to 25 times for ages 40-49, 20 times for ages 50-59, and 15 times for ages 60 onward.
Legal & General uses slightly different limits. It currently allows up to 25 times remuneration for ages 18-49, 20 times for ages 50-59, and 15 times for ages 60-73.
You can read the current limits on the Royal London Relevant Life Plan and Legal & General Relevant Life Plan pages.
Because there are no industry-wide limits, it’s worth talking to an independent financial adviser familiar with each provider’s underwriting rules.
Relevant life cover limits – an example
The table below shows how the maximum remuneration multiples currently compare between Royal London and Legal & General.
| Age | Royal London | Legal & General |
|---|---|---|
| 18-39 | Up to 30x remuneration | Up to 25x remuneration |
| 40-49 | Up to 25x remuneration | Up to 25x remuneration |
| 50-59 | Up to 20x remuneration | Up to 20x remuneration |
| 60+ | Up to 15x remuneration | Up to 15x remuneration* |
*Legal & General’s current Relevant Life Plan is available up to age 73 when the policy starts.
These figures show the most an insurer may offer, rather than how much cover you actually need. The amount of cover you apply for must still be accepted by the insurer, based on your individual circumstances.
What counts as remuneration?
This is where relevant life insurance can be particularly useful for limited company directors.
Your remuneration isn’t necessarily limited to your salary alone.
Royal London states that the total remuneration they consider may include dividends, benefits in kind, bonuses, and salary.
Legal & General also includes salary, bonuses, benefits in kind and regular dividends from shares in the employer’s company or another company within the employer’s group.
This can make a considerable difference if you take a small salary and larger dividends, as many small company directors do.
For more information on paying yourself from your company, read our guide to salary vs dividends for limited company directors.
Example: £12,570 salary plus £40,000 dividends
If, like many other directors, you draw down:
- £12,570 annual salary; and
- £40,000 in regular dividends from your company.
Your total annual remuneration is £52,570.
If an insurer is happy to include both types of income in its calculations, your maximum cover will be based on £52,570 rather than £12,570.
This would give a 45-year-old director, using an insurer with a maximum of 25 times remuneration, a theoretical maximum of:
£52,570 × 25 = £1,314,250
If only the £12,570 salary were taken into account, the same multiple would yield just £314,250.
That’s a difference of £1 million.
This doesn’t mean you need £1.3 million of cover. It simply shows how much the treatment of dividends can affect the amount available.
Do all dividends count?
Don’t assume that every dividend you receive will count towards your cover.
Insurers have their own rules. Legal & General, for example, refers specifically to regular dividends from shares in your employer’s company or another company within the same group.
If dividends make up a large part of your income, check how the insurer treats them before applying.
You may also need to show that your company’s profits support the level of dividends you receive.
For more information on dividends generally, read our guide to how limited company dividends are taxed.
Does existing life insurance affect the amount?
Existing life cover can also affect how much relevant life insurance you can have.
Legal & General, for example, takes existing life cover policies you already have into account when calculating its maximum.
This doesn’t prevent you from having personal and relevant life insurance at the same time, but your insurer may consider your existing policies when deciding how much additional cover it’s prepared to offer.
For obvious reasons, you should tell the insurer, or your financial adviser, if you have any existing life policies.
Will you need to prove your income?
You may need to provide evidence of your earnings, particularly if you’re applying for a large amount of cover.
Legal & General, for example, currently requests evidence of earnings when Relevant Life cover exceeds £3.5 million. Other insurers have their own limits.
You may be asked for company accounts or other evidence showing how much you earn from the business.
This is separate from the medical checks involved in taking out life insurance. The insurer may still ask for health information before deciding whether to offer cover and how much it will cost.
Maximum cover isn’t the same as the amount you need
An insurer will quote you a maximum amount they are prepared to cover, but how much you actually need depends completely on your own circumstances.
You might want enough cover to:
- repay your mortgage;
- replace some of your income for your family;
- cover future private school or university costs;
- pay off other debts;
- provide for a spouse or partner; or
- leave a financial buffer for your dependants.
You should also consider savings, investments, and any life insurance you already have.
There’s little point choosing £1 million of cover simply because an insurer is prepared to offer it if a much smaller amount meets your needs.
Can you increase the amount of cover later?
Some relevant life policies allow you to increase your cover following certain changes in your circumstances without going through the full medical underwriting process again.
As ever, qualifying events and limits depend on the insurer.
This can be useful if your income rises, you take on a larger mortgage or your family circumstances change.
You can also choose policies where the amount of cover increases over time to help protect against inflation.
Check the options when you take out the policy rather than assuming you will be able to increase the cover later on the same terms.
Remember the relevant life rules
Relevant life insurance has to meet strict HMRC rules to qualify for its tax advantages.
These rules cover who can benefit from the policy, the types of benefits it can provide, and when those benefits can be paid.
Make sure the policy is set up as a qualifying relevant life policy rather than simply buying ordinary life insurance through your company.
You can read HMRC’s guidance on relevant life policies and our guide to when relevant life insurance is tax deductible.
How much cover should you apply for?
Start with how much money your family would need if you died, rather than the maximum amount an insurer will offer.
Then check whether your income supports that level of cover.
If you take a low salary and dividends, make sure the insurer knows how you’re paid. Looking at your PAYE salary alone may give a very different picture of your actual income.
For larger policies, you may need to provide evidence of your earnings.
Find out more
If you would like to find out how much relevant life cover you can get through your limited company, our trusted partner, Broadbench, will be happy to help.
Broadbench specialises in providing advice for company directors and has set up life cover policies for hundreds of our visitors.
Simply fill in this form, and the team will get right back to you.
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