Relevant Life Insurance
Maximising Benefits, Minimising Taxes with Business Life Insurance
Relevant Life Insurance: A Comprehensive Guide
Relevant Life Insurance is a unique Business Life Insurance policy, offering a tax-efficient death-in-service benefit for both directors and employees. It’s an excellent way for businesses to provide substantial financial protection to their employees.
Key Aspects of Relevant Life Insurance
- Tax-Efficient: Premiums are usually HMRC-approved as a tax-deductible business expense, offering significant savings.
- Policy Ownership: The business owns and pays for the policy, with benefits going directly to the director’s or employee’s dependants via a Trust.
- Lump Sum Payout: Upon the unfortunate event of the insured’s passing, a lump sum is paid out to their beneficiaries, providing crucial financial support.
How Does Relevant Life Insurance Work?
- Eligibility: Suitable for Directors and employees of UK-registered companies.
- Life-of-Another Basis: The business takes the policy on behalf of the employee, ensuring a straightforward and beneficial arrangement.
- Advantages Over Personal Life Insurance: Excludes payouts from the employee’s Pension Lifetime Allowance and offers more tax-efficient premium payments.
Tax Efficiency of Relevant Life Insurance Explained
The premiums are also usually seen as tax efficient due to being classed as a business expense. This policy can be up to 49% cheaper than non-relevant life policies, saving about £76.96 monthly. It’s an economical choice, significantly reducing personal and corporate financial burdens. *source – Legal & General
| Cost Comparison | Personal Life Cover | Relevant Life Cover |
|---|---|---|
| Monthly Premium to Insurer | £100 | £100 |
| Employee Costs | ||
| – Income Tax (40%) | £68.96 | None |
| – National Insurance (2%) | £3.45 | None |
| Total Employee Earnings Needed for Premium | £172.41 | £0 |
| Employer Costs | ||
| – Employer National Insurance (2%) | £23.79 | None |
| Gross Cost to Company | £196.20 | £100 |
| Corporation Tax Relief (20%) | £39.24 | £20 |
| Total Net Premium | £156.96 | £80 |
Why Choose Us?
At Fortress insurance services, we specialise in arranging tailor-made Relevant Life Insurance policies that align perfectly with your business and employee needs.
We understand the complexities and unique requirements of businesses when it comes to life insurance.
The premiums are also usually seen as tax efficient due to being classed as a business expense.
Our dedicated advisers are here to provide ongoing support and guidance, making sure your policy continues to meet your evolving business needs.
Let us help you protect your Fortress
Contact our team today for personalised advice and start your journey towards financial peace of mind for you and your family.