Relevant Life Insurance allows business owners to provide their employees with death-in-service benefits outside a registered group life scheme.
What is Relevant Life Insurance?
Relevant Life Insurance is an alternative solution to Group Life Insurance and offers a cost effective way to provide an employee with death in service benefit that will sit outside their annual or lifetime pension allowance.
It is also a tax efficient option as the premium is paid by the company and classed as an allowable expense and therefore not a benefit in kind for the employee.
Is Relevant Life Insurance a cost effective solution?
Relevant Life Insurance is uniquely tailored to employers specific requirements. The cost to an employer can work out much less than the cost to an employee arranging an equivalent personal life policy.
This type of policy is viewed as an allowable business expense by HMRC with all premiums and paid benefits qualifying for full Income Tax relief, National Insurance relief and Corporation Tax relief. This means premiums could be reduced by up to 49% compared to a typical life policy if the employee is a higher rate taxpayer. For a basic rate taxpayer this figure could be up to 40%.
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Who does Relevant Life Insurance cover?
A Relevant Life Insurance is an appealing policy to employees. Here are the types of people who may wish to take out this cover:
- Employers looking to provide death-in-service benefits, but with too few employees to set up a group scheme.
- Directors wishing to provide their own individual death-in-service’ benefits without taking out a scheme on all employees.
- High earning individuals, such as directors, where death-in-service does not form part of their ‘lifetime allowance’ (£1.073 million 2021/22).
Relevant Life Insurance plans are not available where there is no employer/employee relationship. For example, sole traders, equity partners of a partnership or equity members of a Limited Liability Partnership.
As a company paid policy, insurance providers define the level of cover as a multiple of your income which can include your salary, bonus, regular dividends and the cash value of any benefit in kind.
The maximum level of cover is age dependant but most insurers will allow you to cover up to 15 times your total remuneration.
As an employee benefit many companies often provide around 4 times salary as a benefit. However, with Relevant Life Insurance employees can increase their level of cover to ensure their loved ones are taken care of should they pass away.
Where Relevant Life Insurance is a company paid policy the level of cover is often aligned with the policy holders expected retirement age.
When setting up cover you will need to decide on an age at which the policy will cease, this can be any age right up to 75 years old.
Why should you choose Personal Healthcare management?
We at Personal Healthcare Management understand the value of family and importance of supporting one another.
Losing a loved one that may be the main earner in the house can bring about so many emotions. Emotions that you may not be ready to deal with and that’s why having a Relevant Life Insurance policy can help bring peace of mind to you and your employees.
- Our services are free for businesses
You do not have to pay us a penny, neither do you pay more for your policy. We work strictly on a referral bases with the insurance providers which means it doesn’t impact your premium.
- Full market review
We have access to all private medical insurers in the UK, which helps us find the best solution for your needs.
- Independent and unbiased
Our advisors have no obligation to any one insurance provider, that is how we guarantee unbiased advice
- Qualified advisors
We are members of four HAB’s (Healthcare Insurance Advisory Board)
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