A relevant life plan is insurance for an employee in case of death in service. It’s a plan paid into by the employer, which is designed to pay a lump sum if the employee dies or is diagnosed with a terminal illness.
Very few people have heard of the plan, so the uptake of the policy is very small compared to the number of people who could benefit and save.
The majority of company directors have some personal life insurance. But nearly all of these are paying for their life insurance either personally through pre-taxed income or through their company and getting a P11D benefit-in-kind penalty for this. Up until recent years, getting the limited company to pay for personal life insurance was only possible for companies that took group life insurance. Often, these types of policies were only possible for companies wishing to insure 10 or more employees.
A higher rate taxpayer can save 49% by paying for their personal life insurance via a relevant life plan. For a basic rate taxpayer, the saving is around 36%.
Like a traditional death in service policy, the sum assured with a relevant life policy is based on a multiple of remuneration. For a company director, the definition of remuneration is based on salary plus dividends plus bonuses, etc. The multiples vary from provider to provider and depend on the age of the director being insured; these range from 10 times remuneration to 25 times remuneration.
Speak to Asset Management IFA Limited today on 02380 420 606 to discuss how your business could benefit from a relevant life policy and ensure your business doesn’t fall down the protection gap.