What is a Relevant Life Policy and why do you need one?

Relevant Life Insurance is a type of life insurance that is owned and paid for by a business. It provides funds to the business owner’s family in the event of premature death.
Relevant Life Insurance can also be beneficial to high earning employees who are looking to avoid their death-in-service benefits becoming part of their lifetime allowance for pension purposes.
It can also benefit small businesses who want to offer life cover to a single employee.
Many small business owners could benefit from the tax efficiencies this cover can provide and avoid overpaying for a Life Insurance policies personally.
The policy must be placed into a Relevant Life Plan Trust, which can be tax-efficient for both employee and employer.
Typically, smaller businesses don’t have the number of employees needed for a Group Life Insurance plan.
As premiums for Relevant Life Cover are paid through the business, any benefit paid out:
– Will normally be free of income tax, National Insurance contributions and capital gains tax
– Won’t usually count towards the employee’s lifetime pension allowance
– Won’t usually be included in the employee’s estate for inheritance tax purposes
To add to those benefits, Relevant Life Insurance will:
– Usually be treated as an allowable expense for corporation tax purposes
– Not incur National Insurance contributions for either employees or employers
– Not constitute a P11D benefit.
Given the tax benefits, Relevant Life Insurance can also be cost-saving for many business owners.
If you’re a small business owner and you’re considering buying Life Insurance for yourself or offering it to employees, it could be beneficial to consider Relevant Life Insurance instead.
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