If you’re a business owner or director in the UK, securing the right insurance for yourself and your employees is essential. One of the most effective ways to do this is by getting a relevant life insurance quote. This unique type of life insurance policy is designed specifically for business owners. This offers tax advantages and flexibility while providing essential life cover. In this guide, we’ll explore what relevant life insurance is? And how to get a relevant life insurance quote tailored to your business.
What is Relevant Life Insurance?
Relevant life insurance is a special life insurance policy set up by an employer for their employees or directors. It’s designed to provide a death-in-service benefit, ensuring that the employee’s family or beneficiaries receive a payout in the event of their death. Unlike personal life insurance policies, the premiums for relevant life insurance are typically paid by the employer, making it a tax-efficient solution for both businesses and employees.
This type of insurance can be especially beneficial for small business owners, key staff members, and directors.Who want to provide financial security for their families without incurring the high costs of group life insurance policies.
Key Benefits of Relevant Life Insurance
1. Tax-Efficient for Businesses
One of the main benefits of relevant life insurance is the tax efficiency it offers for businesses. The premiums paid for the policy are treated as a business expense, meaning they are tax-deductible. This can reduce the taxable profits of the business, lowering the overall corporation tax bill.
2. Personal Life Cover for Employees
For employees or directors, relevant life insurance provides personal life cover. If the insured individual dies, the payout goes directly to their chosen beneficiaries, usually a family member, without being subject to Inheritance Tax (IHT).
3. Affordable for Small Businesses
While traditional group life insurance policies can be expensive for small businesses, relevant life insurance is a cost-effective alternative. It allows business owners to provide valuable life cover for key employees without the need for an expensive group insurance plan.
4. Flexibility for Business Owners
As a business owner or director, relevant life insurance allows you to secure life cover for yourself while benefiting from the same tax-efficient advantages. This flexibility is especially useful for small business owners who need coverage but may not have access to group life insurance options.
How Does Relevant Life Insurance Work?
To understand how relevant life insurance works, let’s break it down step by step:
- Policy Setup: The business (or employer) sets up a life insurance policy for a key employee or director.
- Premiums Paid by the Business: The premiums are paid by the business, and these are considered a tax-deductible expense.
- Death Benefit: In the event of the employee’s death, the death benefit is paid out to their designated beneficiary (typically a family member or spouse).
- Tax-Free Payouts: The payout from the insurance policy is usually free from Inheritance Tax, providing more financial support to the beneficiary.
Who Can Get a Relevant Life Insurance Quote?
Relevant life insurance is typically available to:
- Business Owners and Directors: If you are a business owner or director, you can take out relevant life insurance for yourself to ensure that your family or beneficiaries are financially protected.
- Employees: Businesses can also set up relevant life insurance for their key employees as part of an employee benefits package. This is particularly common for small and medium-sized businesses that want to provide valuable benefits without the expense of group life insurance.
How to Get a Relevant Life Insurance Quote
Getting a relevant life insurance quote is straightforward, but there are a few steps you’ll need to follow:
- Contact an Insurance Provider: Reach out to an insurance provider that offers relevant life insurance policies. Many providers specialize in business insurance and can help you navigate the process.
- Provide Business Details: You’ll need to provide information about your business, including the number of employees or directors, their roles, and the amount of coverage required.
- Choose Coverage Amount: Typically, businesses choose coverage that’s 5-10 times the insured employee’s salary, but this can be adjusted based on individual circumstances.
- Compare Quotes: To ensure you’re getting the best deal, it’s a good idea to compare quotes from different insurance providers to find the most competitive rates.
Relevant Life Insurance Cost
The cost of relevant life insurance depends on several factors, including the age, health, and salary of the insured individual, as well as the amount of coverage required. On average, premiums can range from £10 to £30 per month for basic coverage, but this will vary depending on your specific needs and circumstances.
Things to Consider When Choosing a Relevant Life Insurance Policy
When choosing a relevant life insurance policy for your business, consider the following:
- Coverage Amount: Ensure the policy provides enough coverage for the individual’s family. A common guideline is 5-10 times the person’s annual salary, but it may vary based on their personal financial needs.
- Policy Terms: Read the policy terms carefully to understand the exclusions, the process for claiming, and any other important details.
- Employee Communication: If you’re offering relevant life insurance to employees, ensure they understand the benefits and how the policy works, so they can make informed decisions.
- Insurance Provider Reputation: Choose a provider with a good reputation for customer service and claims handling to ensure a smooth experience if a claim is ever needed.
- Conclusion
- Relevant life insurance is an affordable, tax-efficient way for business owners and directors to secure life cover for themselves and their employees. It provides valuable protection for families in the event of death, offering peace of mind while benefiting from tax advantages. By understanding how relevant life insurance works and obtaining the right coverage for your needs, you can protect your business and ensure your loved ones are taken care of in the future.
Conclusion
Relevant life insurance is an affordable, tax-efficient way for business owners and directors to secure life cover for themselves and their employees. It provides valuable protection for families in the event of death, offering peace of mind while benefiting from tax advantages. By understanding how relevant life insurance works and obtaining the right coverage for your needs, you can protect your business and ensure your loved ones are taken care of in the future.
Frequently Asked Questions (FAQ)
1. What is the difference between relevant life insurance and standard life insurance?
A business sets up relevant life insurance for its employees or directors, providing tax advantages for both the employer and the employee.
2. Can I get relevant life insurance for myself as a business owner?
Business owners or directors take out relevant life insurance to cover themselves, offering valuable protection while benefiting from tax-efficient premiums.
3. How much coverage should I get with relevant life insurance?
The coverage amount is typically 5-10 times the insured person’s salary. The business tailors this to fit the employee’s personal financial situation and needs.
4. Is relevant life insurance tax-efficient?
Yes, the premiums paid for relevant life insurance are tax-deductible for the business, and the death benefit is generally free from Inheritance Tax.
5. How can I get a relevant life insurance quote?
To get a relevant life insurance quote, contact an insurance provider that offers this type of policy. Provide details about your business, the insured individual, and the coverage amount required.
6. Is relevant life insurance available for all employees?
Businesses usually offer relevant life insurance to key employees or directors, although it can be provided to all employees. However, businesses can extend coverage to multiple employees if needed.
7. Can I include relevant life insurance in my employee benefits package?
Yes, relevant life insurance is an excellent addition to your employee benefits package, providing valuable protection for key employees .
8. How do I make a claim on a relevant life insurance policy?
In the event of the insured person’s death, the beneficiary will need to provide a death certificate and follow the claims process outlined by the insurer.
