Relevant Life Insurance is a tax-efficient life cover option that allows businesses to provide death-in-service benefits for their employees. This type of insurance is particularly beneficial for small to medium-sized enterprises (SMEs) that may not have enough eligible employees for a group life scheme.
Key Features and Benefits
Cover and Flexibility
Relevant Life Insurance pays out a lump sum to the employee’s beneficiaries in the event of death or diagnosis of a terminal illness during the policy term. The policy can be tailored based on the employee’s role and cover needs, with options for level or increasing cover.
Tax Efficiency
One of the most significant advantages of Relevant Life Insurance is its tax efficiency:
- Premiums are typically tax-deductible as a business expense.
- The benefit paid out to beneficiaries is usually free from inheritance tax.
- Employees do not pay income tax or National Insurance on the premiums.
- The policy does not count towards the employee’s pension lifetime allowance.
Portability
Unlike traditional group life insurance, Relevant Life Insurance is portable. If an employee leaves the company, they can often keep the policy as their personal life insurance without needing to reapply or undergo medical checks. This provides employees with ongoing protection, even after they move on.
Additional Benefits
Some Relevant Life Insurance policies offer extra features, such as:
- Employee significant illness cover.
- Access to support services like recruitment and legal helplines.
- Second medical opinions and other health-related services.
How It Works
The employer takes out the policy and pays the premiums.
The policy is written under a trust for the employee’s chosen beneficiaries.
If the covered individual passes away or is diagnosed with a terminal illness, a lump sum is paid to the beneficiaries.
Why Consider Relevant Life Insurance?
- Cost-effective for SMEs: Provides an affordable way to offer life cover to key individuals in small businesses.
- Attracts and retains talent: Shows your care for employees’ financial well-being, helping you keep top talent.
- Tax savings: The premiums can reduce the company’s overall tax bill.
- Comprehensive protection: Offers cover for both death and terminal illness.
By providing Relevant Life Insurance, businesses can offer valuable protection to their employees while enjoying tax benefits and potentially improving staff retention. It’s a win-win solution that demonstrates a commitment to employee welfare and financial prudence.
