Overview
Effectively a one man death in service scheme, a Relevant Life Insurance Policy can offer you the same benefits that you already have, but at a fraction of the net cost. Let's start by looking at an example.
Case Study
Let's look at George.
George is a Company Director of Muffins Ltd and currently pays £50 per month for his life cover. He had taken the policy out to run alongside his mortgage which runs for 20 years.
Below summarises the payment how it currently is and how it would look as a Relevant Life Policy, the key thing to consider is how much money the business needs to generate to take £50 (net) out of the business.
In this example, George saves £12,225 over a 20 years and his policy is 56% cheaper, or £611.25 per month.
Who might want a Relevant Life Policy?
Small businesses wanting to offer life insurance to either themselves, or key people but have less than the required number to take out a Death in Service scheme.
High-earning employees who may exceed their personal pension lifetime allowance. Registered group life schemes are included in pension legislation, meaning any proceeds are added to the employee’s pension funds and may cause them to exceed their maximum lifetime allowance.
Members of group life schemes who want to top up their benefits. Some group life schemes are very restrictive. Relevant Life Cover can be used to provide an additional benefit in a tax-efficient way.
Summary
These plans are perfect for business owners and the self-employed because they are;
Owned by the company, but payable to your chosen beneficiary
Corporation Tax deductible
Not counted as a P11D Benefit
The benefit is paid tax free and isn't liable for Inheritance tax.
Relevant Life Policies are specialist products and you should seek Independent Financial Adviser before switching or setting up new policies.
Why not contact us for a chat on how we might be able to help.
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