Readers’ forum: Critical cover

A client who is an employee has sent me their relevant life policy which was arranged by their employer. I know these policies are tax efficient because the premiums are not charged to tax or National Insurance as a benefit in kind for the employee. The employer receives tax relief and any payment from the policy is tax free for the recipient.

However this policy includes what is described as ‘significant illness cover’. I assume this is another term for critical illness cover. My understanding is that premiums for this would not be a tax-free benefit in the hands of the employee.

Does wrapping the critical illness cover in a relevant life assurance policy mean that the whole premium is tax free? Alternatively must I work out how much of the premium relates to the critical illness element and treat that as a benefit in kind?

I...