Relevant life insurance is a form of death-in-service benefit. It can provide benefits to both the employer and the employee.Start a Free Quote
Relevant life insurance is a form of death-in-service benefit, offering a cost-effective solution for businesses. It is typically popular with companies that aren’t big enough to establish a group life scheme, but want to provide the benefit to the directors and employees.
Taking out Relevant life insurance can provide benefits to both the employer and the employee. In this section, we’ll explain:
· How does Relevant life insurance work?
· Why should you consider Relevant life insurance?
· What are the benefits of a Relevant life policy?
· How to choose the right amount of cover
Relevant life cover is set up on a life-of-another basis, which means the cover is set up and paid for by the business, but the pay-out will go into a Trust for the benefit of the employees’ beneficiaries.
It works similarly to a traditional life insurance policy, whereby each individual is assessed based on the amount of cover needed as well as health, age and lifestyle factors. If the insured employee passes away while working for the business, their family will receive a pay-out.
Relevant life insurance may also offer a pay-out if the insured is diagnosed with a terminal illness.
If you are a smaller business, Relevant life insurance could be a beneficial way to offer perks to your staff. A Relevant life policy can be classed as a business expense, so the business can claim tax relief on the premiums.
There are no National Insurance contributions to be paid by either the employee or employer, and the policy is it not a P11D benefit. This means it does not affect employee income tax.
There are benefits for both the business and its employees when you take out Relevant life insurance.
For the business, it’s a tax-efficient solution to protect your staff. It’s more suited to smaller businesses than a group life scheme. Offering Relevant life policies is a useful way to attract and retain staff as it shows you value your staff and care for their financial wellbeing.
For employees, you are essentially getting life insurance without having to pay the premiums.
Relevant life policies can be particularly beneficial for high earners. This is because this type of insurance doesn’t count towards their pension lifetime allowance, while a group life scheme would.
Above all else, Relevant life insurance can provide reassurance and peace of mind that your family will have access to financial support when they need it most.
Relevant Life cover can come in two forms. It can either be for a set amount, known as level cover, or it can be linked to inflation. This means the pay-out will reflect the cost of living at the time, although it can also mean the premiums will change.
The amount of cover is set based on a multiple of the employee’s salary.