What Is Relevant Life Insurance?

This is a tax efficient life insurance policy specifically designed for businesses, allowing employers to offer life insurance (with a death in service benefit) and critical illness cover to their employees on an individual basis.

The policy may be available as life cover only, or life cover and critical illness cover. Terminal illness will generally be covered under both types of policy by most providers. Typically, life cover will pay out a lump sum if the policy holder dies within the policy term. Life and critical illness cover will pay out if the holder is diagnosed with a critical illness or dies during the policy term. It is worth noting however, that different policies may have varying criteria on what constitutes a critical illness.

What Are the Advantages?

Relevant life insurance is a valuable employee benefit, an excellent way for employers to make their staff feel appreciated whilst making a significant tax saving at the same time. It offers a range of advantages to both the company and the employee.

Typical Advantages for Policy Holder (Employee)

  • Cash lump sum for beneficiaries for death and terminal illness
  • Payment sum for critical illness
  • Policy payments and benefits don’t usually count towards life time or annual pension allowances
  • Benefits are not taxed as a benefit kind
  • Benefits are not usually included in their estate and therefore not subject to inheritance tax
  • There is no capital gains tax
  • No national insurance contributions

Typical Advantages for Employer

  • Corporation tax relief
  • No national insurance contributions on premiums

Who Is It Suitable For?

Small Businesses

In some cases, small businesses simply don’t have enough employees to be able to register in a life group scheme, making individual relevant life insurance policies a viable and attractive alternative.

High Earning Employees

This could provide high earning clients, subject to higher tax rates, the opportunity to get extra cover as it doesn’t count towards their lifetime allowance.

Members of Group Life Schemes

Relevant life insurance can also be used to top up pre-existing group life schemes which may be more restrictive, discounting bonuses, overtime etc.

AFP Shrewsbury is a trading style of Gary Harper (FRN 755477) who is an Appointed Representative of AFP Partnership (FRN 300003). AFP Partnership are authorised and regulated by the Financial Conduct Authority. Certain products, including Buy to Let and Commercial mortgages, are not regulated by the Financial Conduct Authority. If you’re interested in discussing mortgage payment protection insurance in more detail, call now for a no obligation chat on Shrewsbury 01743 364377 or e-mail info@afpshrewsbury.co.uk.

Get in touch today for a no-obligation chat

Our experienced advisers can help you find the right protection plan. Evening appointments available.