Who is eligible for relevant life?
To qualify for Relevant Life Plan status there are certain requirements the plan has to meet. It must provide only life cover. No disability or critical illness benefits are allowed. The term cannot exceed the 75th birthday of the employee.
What is relevant life?
What is a Relevant Life Plan? A Relevant Life Plan offers a cost-effective way for an employer to arrange Life Cover on the life of an employee, with the benefit payable to the employee’s family or financial dependants. Premiums are paid, and the policy is owned, by the employer.
What does relevant life cover mean?
death-in-service
Relevant Life Cover allows employers to offer a death-in-service benefit to employees. It’s a tax-efficient life insurance policy – paying out a tax-free lump sum on death or diagnosis of a terminal illness.
Are Relevant life Policies a benefit in kind?
Is a relevant life policy a benefit-in-kind? Relevant life cover is tax deductible and not classed as a P11D benefit-in-kind by HMRC. Employees covered by it also don’t have to pay income tax on the premiums. Both the business and employee don’t have to pay National Insurance contributions either.
What’s the difference between relevant life and business protection?
Whereas Key Person Insurance is geared towards mitigating losses for a business, Relevant Life Cover protects against the death of an employee from relatives’ perspective by providing a tax-free cash lump sum to their family if they do pass away.
How can a relevant life policy be set up?
To qualify as a relevant life plan, a plan has to meet certain conditions:
- It can only provide life cover.
- The term can’t go beyond the employee’s 75th birthday.
- There can’t be a surrender value.
- Benefits must be paid to an individual or charity, or to a trust.
- It mustn’t be set up to avoid tax.
Can relevant life be decreasing term?
If a relevant life cover policy has a decreasing term, this means that the lump sum amount the beneficiaries receive will go down steadily across the duration of the term. This type of cover might be viable if the insured person has a decreasing debt to pay, such as a mortgage.
Can relevant life policies be used for shareholder protection?
Yes, this is possible. There are a number of providers for both these types of insurance who can offer additional cover should either an employee or a shareholder of the business become incapacitated due to a severe critical illness or serious injury.
What is key man life insurance?
Key person insurance is a type of life insurance policy that provides a death benefit to a business if its owner or another significant employee passes away, according to the Insurance Information Institute (III).
Can a relevant life policy be used for shareholder protection?
Due to the tax concessions made by HMRC, on the basis it is designed to provide financial assistance for an employee’s family in the event of their death, relevant life cover is not typically deemed appropriate for shareholders looking to insure each others equity within a business.
Can relevant life cover include critical illness?
In most cases the answer is no, you cannot add Critical Illness Insurance to Relevant Life Cover. This is because Relevant Life Insurance is company-owned.
What is the maximum term of a relevant life plan?
Most relevant life cover providers have a maximum term length of between 40 and 50 years and will end the policy when the insured person turns 75.
