What is Relevant Life Cover?
As an owner of a limited company, you can take out a relevant life policy which covers your own life and will pay a sum to your family/dependants if you pass away or are diagnosed with a terminal illness.
The policy is paid for by the business, which can mean a number of advantages compared to a normal personal life insurance policy. Most significantly, it can be tax efficient and result in savings of up to 50% on the premiums, depending on your tax band.
Do you want to provide a ‘death in service’ benefit to your staff? A relevant life policy can also cover the life of any of the company’s employees meaning the business can offer a benefit which can help attract and retain employees. This may be of interest if you don’t have enough employees to acquire a group life policy, or if you only wish to cover certain people within the business.
Other advantages of a relevant life policy include:
- Death benefit usually free of inheritance tax.
- Sum insured of up to 25 times the life assured’s annual remuneration.
- Must be written into trust for the benefit of your chosen beneficiaries, meaning the sum gets paid out much quicker than waiting for probate.
“88% of businesses valued under £250,000 have never heard of relevant life”. [stated in Legal & General’s State of the Nation’s SMEs 2015]