How Business Owners Save Money With Relevant Life Insurance
We all know that we should have life cover in place for when the worst happens. Whether it’s straight forward term assurance, income protection or critical illness cover, most responsible adults put something in place for their families. But did you know that if you’re a business owner, you could save money with relevant life insurance?
We’re not just talking a few pounds here and there. Leveraging relevant life policies for you and your fellow directors, as well as your key employees, can save many thousands of pounds over the coming years.
Savings aside, relevant life cover should not be regarded as a ‘nice to have’. The recent State of the Nation’s SMEs report by Legal & General uncovered some worrying statistics:
- 53% of the UK’s small businesses think they would cease trading in less than a year, should a key employee die or be diagnosed with critical illness and unable to work.
- 65% have some form of business debt with borrowing increasing 14% on 2013.
- 51% of UK business owners leave no instructions about company shares in a Will.
Professionally arranged relevant life and associated business protection products, including Key Man and Shareholder Protection, ensures that the business and beneficiaries are protected in the of event of the loss of a key person from the business.
The ability to protect your business and its key personnel, in combination with significant savings, makes relevant life cover the smart decision for any business.
So, how does relevant life save you money?
In simple terms, HMRC views relevant life cover as an allowable business expense. This enables the employee to save money on Income Tax and National Insurance (NI). Then the business saves on NI and gets Corporation Tax relief on the insurance premiums.
Depending on prevailing tax brackets, there’s a saving of up to 53% to be gained with the right advice to set up your relevant life policies. As we’re potentially talking meaningful premiums for substantial life cover, there are savings of many thousands of pounds to the individual as well as the business over the years.
Any limited company or limited liability partnership can utilise relevant life policies, gaining the required life cover and significant savings in the process. Interestingly, relevant life cover remains one of the industry’s best kept secrets and we’ve no idea why!
Further benefits include relevant life policies sitting separately from pension contributions or any other ‘benefit in kind’, from an HMRC perspective. So, even with substantial life and critical illness cover and the associated premiums, there’s no tax implication via your P11D and no risk of being pushed into a higher tax bracket.
Relevant life provisions enable you to put highly tax efficient death in services packages in place for key personnel as standard or as fits your needs as a business.
For more information and advice on putting your tax efficient relevant life cover in place, simply get in touch today.
(Published by Cornerstone Finance, November 2018 - https://bit.ly/2Kww0sg)