Relevant life insurance is a cost-effective way to set up individual death-in-service benefits.
Relevant Life Insurance
Relevant life insurance is a cost-effective way to set up individual death-in-service benefits for staff in companies that are too small to consider setting up a full group protection schemes.
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The business takes out the plan on the life of an employee, with instances of director-level employees taking out cover for themselves. Cover can be tailored to your specific requirements.
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It's designed to pay a lump sum benefit to the employee’s family if the person covered dies or is diagnosed with a terminal illness, whilst employed during the term of the policy
Are plans cost-effective?
Relevant Life Plans can be tailored to your specific requirements, and the cost to an employer can work out much less than the cost to an employee arranging the same life insurance policy themselves.
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This type of plan is usually viewed as an allowable business expense by HMRC, all premiums and paid benefits qualify for full Income Tax relief, National Insurance relief and Corporation Tax relief.
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This means premiums could be reduced by up to 49% compared to a typical life policy if the employee is a higher rate taxpayer. For a basic rate taxpayer this figure could be up to 40%.
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What's the process?
01
ENGAGE
02
CONSULT
03
RECOMMEND
04
APPLY
What are the benefits?
Relevant life insurance offers a cost-effective way to provide life insurance with terminal illness cover benefits to employees.
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Providing a relevant life policy as part of an overall benefits package can make your company more attractive to potential employees, can help to retain and reward existing employees, and sends out the signal that you are a responsible and caring employer.
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Relevant life insurance can also help employers reduce their tax liability, and so it can be an affordable way for smaller companies to offer similar benefits to their larger rivals when looking to attract employees.
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Premiums are usually classed as a business expense, and so are likely to be an allowable tax deduction. Keeping the plan in trust offers the potential for an employee to plan for inheritance tax if an estate is, or is likely to be, worth more than the current inheritance tax threshold.
What does the plan cover?
A Relevant Life Plan is effectively company life insurance for employees, tailored to you and your employees.
It does not count towards annual or lifetime pensions, and if your business is not suited to a group life scheme, Relevant Life Plans are a cost-effective way to offer employee life cover.
Key Features
Plans are designed to provide life cover for an employee while working for your business. This may include directors.
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Your business pays regular premiums based on the level of cover.
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If the employee covered dies or is diagnosed with a terminal illness (life expectancy of less than 12 months) whilst in employment during the term, the plan pays out a cash sum into trust.
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The plan is designed to meet certain legislative requirements that mean your premiums, benefits and options should be treated tax efficiently.
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The policy must be placed into an appropriate trust, which can be tax-efficient for both employee and employer.