Over 150 years ago, Russell Conwell, in his famous book Acres of Diamonds, encouraged readers to first and foremost seek to recognise the opportunities that sit right in front them.
The book tells the story of a man who decided to sell his farm and (unsuccessfully) mine for diamonds only to find out that a huge deposit of diamonds was discovered on the land he had sold!
A little recognised diamond in the Financial Services world is the Relevant Life Policy.
For Company Directors, it provides a valuable benefit by having life insurance premiums paid by the company. As a business expense the premiums are tax deductible against corporation tax, aren’t subject to national insurance or normally treated as a benefit in kind.
Tax benefits don’t just stop there. For high earners the benefits of Relevant Life Polices don’t count towards the current Pension Lifetime Allowance which, when exceeded, can result in a tax significant tax charge. Benefits are also free of income tax and generally free of inheritance tax.
A Relevant Life Policy is a tax-efficient alternative to a death-in-service benefit that allows a company to provide and pay for life insurance for key employees. The employee’s family is paid a cash lump sum if the employee dies or is diagnosed with a terminal illness while employed by the business.
Furthermore, unlike traditional Death in Service plans the sum assured is based on total remuneration, for example salary and dividends (not just salary) and if an individual leaves the business they can take the policy with them!
As with all financial products professional advice should be sought from a financial adviser before taking key decisions about Relevant Life Plans and other forms of protection. Given the significant advantages that Relevant Life Plans provide there are some rules about who can benefit.
Get in touch to discuss your existing life insurance provision and the options available to you.
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