Life Insurance on Expenses

Overview of Relevant Life Insurance

What is Relevant Life Insurance? Relevant life insurance is a cost-effective method for small companies to provide individual death-in-service benefits for their employees. Unlike full group protection schemes, which may not be feasible for smaller businesses, this plan allows a business to insure an employee, including directors who may choose to cover themselves. The insurance coverage can be customised to meet specific needs.

How Does a Relevant Life Plan Work? A Relevant Life Plan is a type of term assurance set up by an employer on behalf of an employee, including company directors. If the covered individual dies or is diagnosed with a terminal illness while employed and during the policy term, a lump sum benefit is paid to the employee’s family.

Cost-Effectiveness of Relevant Life Plans These plans are tailored to your specific requirements and can be more cost-effective for employers compared to employees arranging equivalent personal life policies. Recognised as a business expense by HMRC, premiums and paid benefits are eligible for full Income Tax, National Insurance, and Corporation Tax relief. For higher rate taxpayers, this could mean a saving of up to 66% after tax relief.

Contact Information

To discuss Business Protection Plans:

• Call: 0204 5533237 (Lines open 9am to 5pm, Monday to Friday. Calls may be recorded and monitored.)
• Email: [email protected]

Benefits of Relevant Life Insurance

Relevant life insurance is a cost-effective way to provide life and terminal illness cover benefits to employees, including directors. It enhances the company's benefits package, making it more attractive to potential and existing employees, while demonstrating a commitment to employee well-being. It can also reduce an employer's tax liability, allowing smaller companies to offer competitive benefits similar to larger firms.

Premiums are usually considered a business expense and may be an allowable tax deduction. Additionally, placing the plan in trust can help employees plan for inheritance tax if their estate exceeds the current threshold.

Coverage Details

Who Is Covered? Relevant life insurance is suitable for:

• Employers wanting to offer death-in-service benefits without a full group scheme.
• Directors who want personal death-in-service benefits.
• High earners, such as directors, whose death-in-service benefits do not count towards their lifetime allowance (￡1.073 million for 2023/24).

Relevant life insurance is not available for sole traders, equity partners in a partnership, or equity members of an LLP where there is no employer/employee relationship.

Relevant Life Plan Features

The Relevant Life Plan provides tailored company life insurance for employees, not counting towards annual or lifetime pension limits. It is ideal for businesses unsuitable for group life schemes, offering a cost-effective way to provide employee life cover. Key features include:

• Life cover for employees, including directors.
• Business-paid premiums based on cover level.
• A cash sum paid if the employee dies or is diagnosed with a terminal illness (with less than 12 months to live) during employment.
• Tax-efficient treatment of premiums, benefits, and options.
• Policy placement into a Relevant Life Plan Trust for tax efficiency.

Setting Up the Relevant Life Plan

The plan should be set up as follows:

• Single life policy with the employee as the covered person.
• Employer pays premiums during employment.
• Policy written in trust from the outset using the Relevant Life Plan Discretionary Trust, benefiting the covered person and their financial dependants.
• The plan must end before the employee reaches age 75.

For further information visit

https://www.optimahealthandlife.co.uk/business-protection-companies/relevantlifeinsurancequote