A Relevant Life Policy is something which has emerged as a very popular option for small companies since the last one year or so. Its benefits are availed by an employer as a means of setting up life cover for an employee, which entails certain tax exemptions for directors, thereby providing death in service benefits for the employee. The premiums can be paid by a Limited Company while a particular person is named as the beneficiary. But the benefits of this insurance can only be enjoyed by small businesses not having a large number of employees to justify group life schemes. However if the company has less than five employees then the relevant life providers will not offer registered schemes on single life basis owing to legislative obligations. Please remember that these are solely life covers, not meant for accidents and illnesses.
Basic conditions under which one can qualify for a relevant life policy
- One of the basic conditions that a policy needs to fulfill in order to be a relevant life policy is that the beneficiary should be entitled to a hefty amount of money if he or she dies before the age of 75.
- The benefits of the plan are generally not a part of the pension allowance (P11D)
- The benefits of the policy can either be availed by a trust or by an individual. These are payable by a trust. There are some of the Limited companies that issue this particular policy under a discretionary trust
- There might be certain employees who go beyond the pension lifetime allowance. In that case the registered group schemes will come within the ambit of the pension’s legislation. It implies that the lump sum which the beneficiary is entitled to, on his death, will be added to his pension funds while the maximum allowance that can be gathered by the person during his lifetime, is calculated.
- But owing to the fact that a relevant life policy is not exactly a registered group life scheme, it is understandable that it is not included in the employee’s pension allowance. However it also suggests that the Corporation Tax Relief is not ensured by the way it is done by registered group schemes.
- This policy usually does not entail a surrender value. It does not act like a life term assurance, thus no surrender value involved
- The employer may seek tax advantages on the premiums paid for these covers as a business or trading expense. The tax inspector, on the other hand, should be convinced that the premiums of the Relevant Life Policy were a part of the usual remuneration package of the employee
- Make sure that you are availing the benefits of this insurance not to avoid tax.
Relevant Life Policy- Bright Grey Relevant Life Policy
At this moment, if you are looking for a relevant life policy it is advisable that you opt for a Bright Grey Relevant Life Policy. The range of benefits covered here includes tax exemptions for high income group, useful individual stand alone cover, non taxed premiums, 15 times annual salary cover for customers above 40 years of age etc.
Author’s Bio: Sam tryst with finance related matters can be traced back to the time (around two years ago) when her first financial blog appeared. Till then she has slowly gathered the confidence to deal with complicated financial matters like the pros and cons of insurances, relevant insurances etc. Now she has her financial blogs coming out regularly, which cover a host of topics including loans, insurances, debt relief programs etc.