As an owner of a small business you must have heard about the Relevant Life Policy from most of your acquaintances in your field. It is a new kind of policy (only around a year since it has become popular with the employers). You must have an idea that investing in a Relevant Life Policy implies that you will be entitled to certain tax advantages. But do you know about these advantages in detail? If not, then this article will aid you in acquiring due knowledge in this regard.
What is a Relevant Life Policy?
Before going in to the details of the kinds of advantages that you will be entitled to once you avail the Relevant Life Cover, you should have to acquire solid know how of the dynamics that rule the workings of this policy. Let us learn more on that:
- A Relevant Life Insurance is a single life stand alone cover that is availed by the employer of a small company when he wants to establish a death in service benefit for his employee
- The company must have at least 5 employees to take the scheme. But the the number of workers should not be large enough to justify a group life scheme.
- The protection cover expires after the 75th birthday of the client
The advantages that can be availed with this kind of insurance are listed below:
- The premiums paid out for this cover are tax free as they are not something that are paid in kind
- The high earning employees can keep it separate from their pension funds and annual allowances
- The employers can receive substantial tax benefits by availing this policy as they are considered to be trade expenses
- There are no P11D charges involved, thus the employer ends up saving substantial costs
- As the benefits are payable through a discretionary trust, it ensures that the money reaches the right person and at the right time thus alleviating fears regarding the pay outs falling in wrong hands.
- The benefits that are paid out are free of inheritance tax as well
- It is not subject to the National Insurance purposes
Conclusion
Investing in a relevant life policy might find
You save up a lot than what you would have done, in case you had taken a personal life cover. Here you might as well would have paid from your post tax income or from your company’s account. But the Relevant Life Policy is paid through the discretionary trust, with several tax benefits mentioned above.
Author Bio: Sam Payn’s informative blogs and articles mainly center on the varied financial matters including home loans and bad credit loans. Recently he has diversified to writing about insurance.