What is relevant life insurance for directors?
As a company director, have you ever considered that it may be more beneficial to you to insure your life through your business rather than through a personal life insurance policy? Believe it or not, this is absolutely the case.
We pride ourselves on being leading experts in relevant life insurance for company directors. For more information contact us on 0800 009 6559 or CLICK HERE.
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What is relevant life insurance?
Relevant life insurance is essentially a ‘death in service’ policy designed to pay out a tax-free sum to the family or dependents of the employee on their passing away, or if they get diagnosed with a terminal illness. The business will pay the policy premiums which will be written into a discretionary trust – this will then pay out to the employee’s beneficiaries if they die whilst still employed by this company.
The most common reason for taking out relevant life cover is for a business to provide cover for its directors or senior staff. A company can take out multiple relevant life insurance policies to protect several directors or key members of staff.
With the tax savings involved, this type of cover could be extremely beneficial to those employees that are high earning (such as directors), who might exceed their personal pension lifetime allowance. These benefits are not counted towards that number. It is a great way to insure your life via your business.
Relevant life insurance for directors vs personal life insurance
With relevant life insurance, you have a way of getting the great cover you deserve, whilst also benefitting from a big saving in tax – all HMRC approved of course!
If you are paying a basic tax rate, there is a potential saving of 31.5%* every month when using a relevant life plan as opposed to paying, for example £100 a month for personal life insurance. If you pay more tax than this, the savings could be even greater.
The premiums you would pay for a director’s life insurance policy are classed as an allowable business expense, meaning all of the paid benefits and premiums from this qualify for:
- Corporation tax relief
- Full income tax relief
- National insurance relief
Meaning there is the potential for reduced premiums with an up to 49%** saving! This could lead to a very cost-effective outcome for yourself, and your company compared to a personal life insurance policy.
The added benefit is that it is still just as easy to apply for this type of cover. Save time, save money, and protect your world with iam|INSURED.
Converting your relevant life policy to personal cover
One of the best advantages of relevant life cover is the fact that this type of policy is now portable. This means that if you ever choose to leave or sell the business you have the option of taking your policy with you. You can either:
- Convert your policy to personal cover in which case you would then be responsible for paying the premiums yourself
- If joining another business your new employer will be able to take over the policy, provided they are happy with this arrangement
In the case of a new employer taking on the policy, they would have to create a new discretionary trust with themselves as the trustee. Any transfer of policy must be complete within 90 days of leaving your previous employer.
Relevant life insurance comparison
If you are still asking yourself why relevant life insurance is the right choice for you, here are the advantages listed below compared to other types of policies.
| Relevant Life Insurance | Personal Life Insurance | Group Life Insurance | Key Person Life Insurance | |
| Provides family protection | YES | YES | YES | NO |
| Tax deductible premiums | YES | NO | YES | YES |
| Flexible (e.g. portable) | YES | YES | NO | NO |
| Medical underwriting | YES | YES | NO | YES |
| Critical illness Cover options | YES (limited options) | YES | NO | YES |
| Paid personally or by company | COMPANY | PERSONALLY | COMPANY | COMPANY |
You can also quickly and easily contact one of our business insurance experts to get FREE advice on 0800 009 6559 or CLICK HERE.
Are you in need of life insurance advice?
To make sure you are getting the right cover at the right price to suit your needs, don’t hesitate to get in touch with one of our EXPERTS to get FREE and FRIENDLY advice by calling 0800 009 6559 or CLICK HERE.
Our normal office hours are:
- Monday to Thursday 8am to 8pm
- Friday 8am to 3pm
- Saturday 10am to 2pm
*Statistics provided by unbiased.co.uk
**According to Legal and General
Useful resources
Here are some useful resources for anyone looking to learn more about relevant life insurance for directors.
MoneyPeopleOnline – What is relevant life insurance and how does it work?
Finder.com – Life insurance statistics
Statista – Life insurance industry in the United Kingdom (UK)
