If you are the director of a small company and you have a few numbers of employees, you must have heard about relevant life policy. As compared to the conventional life insurance coverage, this type of policy has been introduced in the market much later; but in spite of being relatively new it has turned out to be an extremely popular option among the employers. This is largely due to the huge tax benefits that it offers. Moreover, offering individual life coverage to each and every employee also turns out to be way more hectic and expensive as well. So if you are not quite aware about the benefits of new alternative in the insurance market, here are they mentioned in detail
Tax benefits of relevant life policy
- Earlier shareholders or any employer of start-ups had to face many problems if they wanted to but these kinds of policies. This is so because they had to manage the premiums from their post tax earnings, or else, they needed to pay the premium from their company account. Unlike these, in a relevant life policy the premiums are paid by the employers.
- The premiums of the traditional policies are subject to crucial tax burdens and this is where a relevant life policy turns out to be a lifesaver as the premiums for this are paid in a very tax efficient manner.
- One of the exclusive features of this type of policy is that it is not subject to National Insurance obligations. Hence, both employers as well as employees can apply for this project.
- Another great thing about this type of policy is that the premiums are not considered as benefits in kind and therefore these are not taxed.
- If the local trade inspector can be convinced of the fact that the premiums are a part of trade expenses, the employers, too, get to enjoy certain corporation tax relief.
Well, having mentioned the prime tax benefits of relevant life policies, now let’s look us at the other advantages of this type of life cover and how does relevant life insurance work –
- Relevant life policies seem to be an ideal solution for people with high earnings. This is so because they are allowed to keep these benefits separate from their pension funds as well as other annual allowances.
- One of the best things about this unique type of life insurance cover is that one can leave a letter of wishes when it comes to the payment of these benefits. According to the rules, if the nominee is a child and cannot be given the due amounts, the client must nominate an adult guardian who will continue to receive the benefits till the child becomes an will take care of the money.