Relevant Life Insurance | What You NEED To Know

Guest: Suneth Silva

Roles: Founding Director of the WIS Group of Companies, IFA, and trained accountant

Topic: Relevant Life Insurance and Death in Service Benefits

Q1: What are death in service benefits?

Answer:

Death in service (DIS) benefits are usually well-documented employer-provided life cover schemes. Employees are typically given a percentage or multiple of their annual income, which is paid out as a lump sum if they pass away while employed.

These benefits are more common in larger firms.

They have limited flexibility, especially regarding the amount of cover.

Q2: What is relevant life insurance?

Answer:

A relevant life plan is a tax-efficient way for an employer to provide life cover to employees or directors, with the benefit paid to their family or financial dependents.

Key points:

• It is individual life cover, written for the benefit of a specific director or employee.
• The policy pays out if the employee or director dies before the end of the policy.
• It also pays out in the event of terminal illness (an illness expected to lead to death within 12 months).

Q3: Who is eligible for a relevant life plan?

Answer:

Eligible individuals:

• Residents in the United Kingdom.
• Employees on payroll (salaried employees).
• Can include directors and general employees.

Not eligible:

• Sole traders
• Partnerships

Purpose of the plan:

• Designed for employers who want to provide different levels of cover to certain employees (e.g., higher-level executives or directors) than what a group scheme provides.
• Suitable for businesses unable to provide group schemes, which often require a minimum number of employees.

Q4: How does relevant life insurance benefit the business financially?

Answer:

Premiums are paid by the business, which are treated as a business expense.

This can save 19% in corporation tax.

When combined with other tax savings, businesses can save up to 49% compared to personal policies.

There is no benefit in kind for the director or employee.

Q5: What are the main advantages of relevant life insurance?

Answer:

• Tax-efficient: Paid by the business, saving on corporation tax.
• Flexible cover: Can tailor amounts for specific employees or directors.
• Beneficiaries receive proceeds tax-free.
• Personal protection: Ideal for directors and key employees who need individual coverage.

Q6: How can I get more information?

Answer:

Call: 0203 01968

Visit: wisbusinessprotection.co.uk

Conclusion:

Relevant life insurance is a tax-efficient, flexible life insurance policy paid for by the business. It provides personal protection for directors and employees, with tax-free proceeds paid directly to beneficiaries.