5 REASON YOU SHOULD TAKE OUT RELEVANT LIFE INSURANCE
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Relevant life insurance is a type of life insurance policy that is taken out by businesses on behalf of their employees. It’s intended to offer a death-in-service benefit that gives the employee’s loved ones a lump sum payment that is tax-free in the case of their passing. Here are five explanations as to why a business could think about purchasing pertinent life insurance:
It’s important to note that relevant life insurance is subject to certain eligibility criteria and may not be suitable for all companies or employees. It’s crucial to seek professional advice from a qualified insurance professional or financial advisor to determine if relevant life insurance is appropriate for your company’s needs and comply with applicable laws and regulations.
- Employee benefits: Offering relevant life insurance as an employee benefit can be an attractive perk for employees. It shows that the company values its employees and cares about their well-being, which can help with recruitment and retention efforts. Many businesses struggle to keep their best employees. Good employees are always on the lookout for new opportunities and ways to improve their quality of life. If another company offers relevant life insurance,an employee may use that as a reason to switch jobs. Providing relevant life insurance not only helps to keep employees working with you but also shows that you care about their wellbeing and that of their families. It can be an excellent tool for improving workplace relationships, especially with management.
- Tax-efficient: Relevant life insurance is typically tax-efficient for both the company and the employee. Premiums paid by the company are usually tax-deductible as a business expense, and the benefit paid out to the employee’s loved ones is usually tax-free via a discretionary trust. This can provide a cost-effective way to provide life insurance cover for employees. Directors can take out relevant life for themselves saving them up to 52% against taking out a personal life insurance policy
- Small businesses: Relevant life insurance can be particularly beneficial for small businesses that may not have a large group life insurance scheme in place. It allows small businesses to offer life insurance coverage to their employees without the need for a formal group scheme, which can be more administratively complex and costly.
- Flexible cover: Relevant life insurance policies can be tailored to meet the specific needs of the company and its employees. Coverage amounts can be customized based on the employee’s salary, and the policy can be set up to include additional benefits such as critical illness cover or terminal illness coverage.
- Personal protection: Relevant life insurance provides a valuable financial safety net for the employee’s loved ones in the event of their death. It can help to alleviate the financial burden on the employee’s family by providing funds to cover expenses such as funeral costs, mortgage payments, and other financial obligations.
Disclaimer: Information in regard to tax treatment and basis of reliefs are dependent on current legislation. Individual circumstances are not guaranteed and may be subject to change. This is to be used as a guide only and we always recommend speaking to a qualified tax advisor. The Financial Conduct Authority do not regulate trusts.
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