Relevant Life Insurance.

This is the most basic form of Relevant Life Insurance and is designed to provide a lump sum payment to the employee’s beneficiaries in the event of their death. Key features include:

• Death Benefit: Pays out a lump sum if the insured employee dies during the policy term.
• Terminal Illness Cover: Many policies include a payout if the employee is diagnosed with a terminal illness with a life expectancy of less than 12 months.
• Optional Critical Illness Cover: Some policies offer an optional add-on for critical illness cover, which pays out upon diagnosis of certain serious illnesses.

Our Relevant Life Insurance advisors team will help you determine what type of coverage you need and how much to fit your circumstances.

Premiums can be treated as an allowable expense for the employer in calculating their tax liability as long as they qualify under the ‘wholly and exclusively’ rules.

The cover is portable, so employees can take it to a new employer without having to answer any new underwriting or medical questions.

As Company Director, you can pay for life cover and death in service through your business. This will save you tax on the premiums as they are paid from the business.

This type of plan is a useful way of taking life assurance for family protection. The plan would be written in trust for your beneficiaries, and therefore, on the claim, the proceeds would not form part of your estate on death.

You can have any amount of cover between 1 x and 30 x income or a set amount. The policy can be dated to your anticipated retirement age or a maximum age of 75.

There are a handful of reasons why we recommend getting a Relevant Life Insurance policy; our team of experts have worked in the industry for many years, and we believe some of the following reasons are the most important;

Small companies that don’t have enough members for a group scheme.

A cost-effective way for an employer to arrange life coverage for an employee’s life.

You want life insurance but want to set up a plan in a tax-efficient way.

To cover the cost of death, including business costs, family needs, and more.

People are financially dependent on you.

High earners who don’t want their group death-in-service lump sum benefits included in their lifetime pension allowance.

Employees looking to top up the benefits they get from their employer’s scheme.

We ensure our clients understand that even when you pass, your business and family are left behind and may need support. Getting Relevant Life Insurance provides a lifeboat for the people who depend on you when they need it most.

Relevant life insurance gives employees free life insurance, as it’s applied for and paid for by the business. It is written into trust and pays out a lump sum to trustees to benefit the beneficiaries if employees die or are diagnosed with a terminal illness that meets our definition while employed during the policy term. It’s a benefit that can make staff feel valued. And it’s tax-efficient, too – for all parties.

Our team of experts here at Protex Financial recommends you start looking for Relevant life insurance as soon as you can. Once your business is at a point to benefit from this tax-efficient life insurance option, then start looking.

Relevant Life Insurance is available to employees of limited companies, including directors. It is typically not available to sole traders or partners in partnerships. Eligibility criteria may also include factors such as the employee’s age, health status, and length of employment. Some insurers may have specific requirements, so it’s important to check with the provider.

The primary difference between Relevant Life Insurance and personal life insurance is that the employer arranges and pays for Relevant Life Insurance. The premiums are usually tax-deductible as a business expense, and the benefit paid to the beneficiaries is generally tax-free. In contrast, the individual pays personal life insurance premiums, and while the benefit is also tax-free, there are no business-related tax advantages.

The tax benefits of Relevant Life Insurance include:

• Tax-Deductible Premiums: Premiums paid by the employer are usually treated as a business expense, reducing the company’s taxable profit.
• No Benefit-In-Kind Tax: Employees do not have to pay income tax on the premiums, as they are not considered a benefit in kind.
• Tax-Free Payout: The lump sum paid to the beneficiaries is generally free from income tax, National Insurance, and Inheritance Tax, making it a highly efficient benefit.

Yes, Relevant Life Insurance can be taken out for part-time employees as long as they are employed by the company and meet the insurer’s eligibility criteria. Coverage amounts and terms may be adjusted to reflect their part-time status and associated earnings.

Relevant Life Insurance typically covers:

• Death Benefit: A lump sum payment to the beneficiaries if the employee dies during the policy term.
• Terminal Illness: Some policies include a payout if the employee is diagnosed with a terminal illness with a life expectancy of less than 12 months.
• Optional Add-Ons: Some insurers offer optional add-ons such as critical illness cover, which provides a payout if the employee is diagnosed with certain serious illnesses.

The sum insured is usually based on a multiple of the employee’s salary, which may include bonuses and dividends. The multiple can vary, often ranging from 10 to 20 times the annual salary. The exact amount is agreed upon between the employer and the insurer, taking into account the employee’s financial needs and the company’s budget.

Generally, Relevant Life Insurance policies are not transferable. If an employee leaves the company, the policy typically lapses. However, some insurers may offer a conversion option, allowing the departing employee to convert the cover to a personal life insurance policy without needing new medical underwriting, albeit usually at a higher premium.

Yes, there are usually restrictions on the amount of cover available. These restrictions are set by the insurer and can depend on various factors, such as the employee’s age, health, and income. Maximum coverage limits are common, and it’s important to review them with the insurer to ensure the coverage meets the needs of the employee and the company.

Yes, directors of their own limited companies can take out Relevant Life Insurance. It provides a tax-efficient way to secure life cover and is treated as an allowable business expense, offering financial protection and tax benefits.

To set up a Relevant Life Insurance policy, follow these steps:

• Contact an Insurance Broker: Reach out to insurers or financial advisers who specialise in business insurance.
• Assess Needs: Determine the coverage needs for your employees, considering factors like salary, role, and financial dependents.
• Obtain Quotes: Request quotes from multiple insurers to compare terms, benefits, and costs.
• Choose a Policy: Select the policy that best meets your needs and budget.
• Complete Application: Fill out the necessary application forms and provide required information about the employees to be covered.
• Underwriting: The insurer may require medical underwriting for each employee.
• Policy Issuance: Once approved, the policy is issued, and coverage begins upon payment of the first premium.