September 22, 2020

Relevant life insurance for a small-medium enterprise

Our client

Whilst discussing our client’s life insurance requirements, it became apparent that he ran a small to a medium-sized limited company with his business partner. We suggested that they should look at Relevant Life insurance.

“69% of businesses have never heard of a relevant life plan” [stated in Legal & General’s State of the Nation’s SMEs 2019]

What is Relevant Life Cover?

Relevant Life Plans can be particularly beneficial for small businesses that don’t have enough eligible employees to warrant a group life scheme.

It can be arranged to provide a lump sum for the benefit of the employees family if the employee dies or is diagnosed with a terminal illness.

The policy is paid for by the business, which can mean several advantages compared to a personal life insurance policy. Most significantly, it can be tax-efficient and result in savings on the total cost of paying for the policy, depending on your tax band.

Relevant Life cover can offer a real benefit for businesses and 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 individuals within the business.

One benefit of arranging a relevant life policy is that the payout in the event of death does not form part of the pension lifetime allowance which is the case for many group schemes.

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
  • Held in Trust** for the benefit of their chosen beneficiaries meaning the sum gets paid out much quicker than waiting for probate

Our clients

ABC company needed relevant life cover to provide an employee benefit to its employees Mr H and Mr G.

We arranged a relevant life policy on each of their lives with a sum assured of £200,000 which was the equivalent of 4x each employee yearly salary. This provides cover to their expected retirement age for a monthly premium of £31.26 and £31.24.

This was a fairly straight forward case. Quote, application and policy started within 2 weeks of our first making contact.

They are now covered should either of them pass away meaning that the employees now have peace of mind that if the worst were to happen, a cash sum would be paid to their beneficiaries.

Trusts are not regulated by the Financial Conduct Authority.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

If you are interested in arranging a Relevant Life policy it really can pay to take expert advice, please call us on Freephone: 0800 644 4468.

Our team of experienced advisers are available between 09.00 and 19.00 Monday to Thursday and 09.00 to 17.00 on Friday.

Information regards to taxation levels and basis of relief are dependent on current legislation. Individual circumstances are not guaranteed and may be subject to change.  Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success.  All applications are subject to underwriting.

Next steps

Whilst you are welcome to get a quote online, we would recommend you speak to one of our advisers.

Any quote that your adviser provides you with will take into account your circumstances and medical history, as well as your budget!

An online quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.

Call Freephone 0800 644 4468 – Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.

Please feel free to read our Independent client reviews, or read about the team at Future Proof

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Take a look at our handy guides ‘What Cover is Right for me?’

Do you suffer from a medical condition and concerned you can’t secure Life Insurance?  Please view our ‘Medical Guides’ for further information.

Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success.  All applications are subject to underwriting.

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endorsement of its provider, products or services by us or St. James’s Place.