Relevant Life Insurance has emerged as a compelling option, gaining popularity among high-earning employees and directors of companies that don’t qualify for group life insurance coverage. This specialized insurance policy offers significant advantages, including tax benefits and death-in-service benefits. However, understanding the intricacies and eligibility criteria for relevant life cover is crucial to make the most of its advantages. In this comprehensive guide, we will explore how to avail the biggest benefits of Relevant Life Insurance and why it has become an attractive option for many.
How to Secure a Relevant Life Insurance Policy
Research and Consultation: When considering Relevant Life Insurance, conducting thorough research is essential. Utilize the internet to gather information and gain insights into the policy. Since it is a relatively new offering, professional advice from tax experts is invaluable. A tax professional can assess your specific situation, determine if the policy suits your needs, and calculate the potential tax benefits.
Establish a Trust: Once you decide to opt for Relevant Life Insurance, your employer will set up a trust on your behalf. A trust can have one or multiple trustees, and your employer must be one of the trustees. Insurance experts recommend having more than one trustee to avoid potential complications if a trustee passes away. If the policy is intended for the benefit of an employee and to maximize tax benefits, you can authorize a “Letter of Wishes” specifying how you want the beneficiaries to utilize the proceeds. Having a trustee appointed increases the likelihood of fulfilling your wishes, making it a highly beneficial aspect of the policy.
Compare Policies: With several insurance carriers offering Relevant Life Insurance policies, it’s crucial to compare different options and conduct comprehensive research before making a decision. Discussing your specific needs and circumstances with an insurance professional can also provide valuable insights into selecting the most suitable policy.
The Advantages
Relevant Life Insurance comes with several significant advantages, making it a sought-after choice for many individuals and businesses:
- Tax Benefits: One of the most compelling benefits of Relevant Life Insurance is the tax exemption it offers. Since the employer pays the premiums on behalf of the employee, these premiums are not considered for National Insurance contributions of the employer or employee. Additionally, for employees, the policy is not regarded as a benefit in kind, leading to further tax exemptions.
- Allowable Trading Expenditure: In certain cases, local tax authorities may accept the policy under the “wholly and exclusively” guidelines. In such instances, the payout offered by the employer can be itemized as an allowable trading expenditure, providing a tax-exempt advantage.
- Death-in-Service Benefit: Relevant Life Insurance provides a death-in-service benefit, ensuring that the beneficiaries or family members of the insured individual receive the payout if the policyholder passes away during the policy term. This benefit offers financial security to loved ones, making it a crucial aspect of the policy.
Conclusion
Relevant Life Insurance has emerged as a valuable option, particularly for high-earning employees and directors seeking comprehensive coverage without qualifying for group life insurance. The tax benefits and death-in-service benefits make it an attractive choice, but availing these advantages requires careful consideration and adherence to eligibility criteria. Through thorough research, professional advice, and comparisons of policies, individuals can make informed decisions and secure a Relevant Life Insurance policy that aligns with their specific needs and offers financial security for their loved ones.
