Relevant life cover
If you’re a small business with less than five employees, this offers an alternative to group life schemes and can be a tax efficient way of offering death in service benefits to staff – which can give them and their families real peace of mind. It can be a valuable addition, or a starting point for any benefits package, whilst helping to retain your best people, or recruit new talent.
It’s a good way of keeping hard earned pennies away from the taxman as it can usually be claimed as a business expense and it’s not classed as a ‘benefit in kind’, so there’s no income tax to pay. The bonuses don’t end there, as the policy is written ‘in trust’. There’s potentially no inheritance tax payable either.
Like with Key person insurance, a relevant life policy would be taken out and paid for by the business on behalf of the employee. LifeSearch offers up to 25 times an employee’s annual salary (or dividends) and the policy term can be suited to what you need – level, decreasing or increasing (although it can’t go beyond the employee’s 75th birthday).
A claim can be made if the person named in the policy passes away or has a terminal illness; or if that employee leaves, then they can take the policy with them – and there’s no surrender value (the amount payable to a person who surrenders a life insurance policy).