RELEVANT LIFE COVER

Protect your company

RELEVANT LIFE COVER

Protect your company

What is Relevant Life Cover?

Relevant life cover is an insurance policy taken out by businesses for the benefit of their staff. If a covered employee dies while they’re working for the company, then the insurance company will make a lump-sum pay out to the family of the deceased. It’s a way of giving a benefit to a director or employee of the company, and there are related corporate tax benefits, too.

In general, it’s designed for smaller companies who only have a handful of employees to offer something akin to life insurance — that type of insurance can be costly and difficult to set up if there aren’t too many staff members.

Who is Relevant Life Cover For?

It is for employees, directors, and owners of a company. Each case is handled differently. Like life insurance, the premiums, which are paid for by the company, are calculated by assessing a person’s age, health, and lifestyle. For the duration of time that the insured party is working for the company, they’ll be covered.

That means that your employees won’t need to have their own life insurance until they leave your employment (though it’s worth noting that employees should check that the amount it covers is sufficient; they may want to top it with their own policies). If and when the employee does leave, the policy can be taken over by their new employer, or the employee can take control of the policy personally.

Who is Relevant Life Cover Not For?

This insurance is only for companies with employees. If you’re a sole-trader or self-employed, then you’ll need to look at other life insurance options.

What Are The Advantages?

There are multiple reasons why a company would want to take our cover for its employees. For starters, it’s another benefit that can help keep morale high and your best employees on side. Second, there are significant tax benefits to taking out these kinds of policies; while it is a benefit to everyone, it’s not treated as a benefit-in-kind, which means the business can treat as an expense for tax purposes. Because there’s not a “group” aspect for this type of insurance, businesses can select who within the company receives the benefit, and who doesn’t. It may be given as a reward in return for a certain number of years service, for example.

How Much Does it Cost?

There’s no “one size fits all” approach to insurance; they’re always dependent on a person’s individual circumstances. How much is paid for each employee will depend on how much cover is needed, their age, lifestyle, and any health conditions they may have. The more coverage that you want, the higher the costs.

All companies have a duty to look after their employees. By offering relevant life cover, you’ll be offering an additional incentive for your employees to continue working with you. This, combined with the many tax benefits, makes it an attractive proposition for business owners.

As mortgage advisers, Active Mortgage, can offer a host of information on a range of topics and insurance choices. Contact us today.

These articles are for information only and no advice should be conferred from the content within. Please seek independent financial advice prior to taking any action.

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