Business Protection
A Relevant Life Plan is a term assurance plan available to employers to provide an individual death in service benefit for an employee. It is designed to pay a lump sum if the employee dies whilst employed for the length of the policy. It will also pay out if the employee, whilst employed, is diagnosed with a terminal illness and meets the relevant criteria at any time during cover. A Relevant Life Plan is paid for by the Employer.
Tax Benefits
Employer benefits:
- Corporation tax relief (so long as the premiums are wholly and exclusively for the purposes of the business)
- No National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy
Employee benefits:
- No National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy
- The policy payments won’t be taxed as a benefit in kind
- Policy payments and benefits don’t count towards annual or lifetime pension allowances
What makes it Cost Effective?
Relevant Life Plans are similar to most other types of life cover except they aim to provide a tax efficient benefit provided by an employer for an employee.
| NON-RELEVANT LIFE PLAN POLICY | RELEVANT LIFE PLAN | ||
| Annual Premium | £1,000 | £1,000 | |
| Employee Tax | National Insurance contribution (assuming 2%) | £34.38 | – |
| Income Tax (assuming 40%) | £689.65 | – | |
| Employed Tax | National Insurance contribution (assuming 13.8%) | £237.93 | – |
| Less Corporation Tax (assuming 20%) | -£392.41 | -£200 | |
| Total Cost | £1,569.65 | £800 |
Relevant Life Plan Trust
A Relevant Life Plan is designed to be written in a discretionary trust at outset, with the employee’s family and dependants as beneficiaries – this also removes the benefit amount from the insured person’s estate which means that it can mitigate inheritance tax on death of the insured.
Key man Insurance
Typically, the success of a start-up relies on a handful of people – usually the owner and perhaps one or two other people. Key Man Insurance is a life assurance policy taken out by a company on its key employees and is designed to ensure the business can survive should that individual die. We work with our insurance providers to offer affordable, tailored Key Man insurance so that your company can survive the death of someone integral to its success.
Shareholders Protection:
For businesses with more than 1 shareholder, this protects both your legacy (to your family / beneficiaries) and your business partners by ensuring funds are available to the other shareholders of your business to purchase your shares from your estate should you pass away.