Relevant Life Insurance

Share This Guide, Choose Your Platform!

Relevant Life Insurance for directors 

A Relevant Life Insurance (RLP) policy provides life cover to the dependants of the policyholder. As part of this, the funds are paid via a discretionary trust. Notably, these policies work very similar to Keyman-type policies, which offer death in service benefits.

When you look for a Relevant Life cover quote, the premiums are paid for by the contractor’s company rather than the employee. Therefore, as a legitimate business expense, this will save tax for you as the contractor. In addition, a Relevant Life Insurance policy is also a very popular type of insurance for contractors UK.

Initial thoughts on contractor life insurance

Please note that you can take out a Relevant Life plan policy to protect employees or directors. As a result, this will give the person covered family income benefits. When you extend cover to your staff, this can also include your spouse. Importantly, it is key you are aware that when you pay for an RLP plan this is on the basis that you or your employees receive a salary from your company.

In addition to relevant life insurance for contractors, there are four other financial products which are specifically for contractors. Depending on your circumstances these may be worth consideration:

Now, back to contractor life insurance in the UK. Whether you are a business owner or a contractor, a Relevant Life policy is very tax-efficient. This is when you compare it to personal life insurance.

How much can you save with Relevant Life Insurance for contractors? 

When you take out an RLP plan you can make significant savings when you compare this to paying for life insurance personally. Therefore, let us now see how the cost of your contractor RLP policy shifts when you obtain a Relevant Life cover quote. It will move from your pocket to your company expenses and the taxman.

An example of relevant life insurance for directors

Let us assume that you own your own company. You pay £100 a month and choose to pay for Contractor Life Insurance out of your own pocket i.e., personally. Please note that this will cost your business more than it should. Notably, if you are a 40% taxpayer, you need to consider that you will have already paid tax on the £100 in the form of income tax and employer and employee NI contributions. In fact, after 19% Corporation Tax (CT) relief, the net cost to your business works out at £158.93 per month.

When you have a Relevant Life Insurance policy for your contractor life insurance, you do not pay any NI contributions or income tax on the premiums. However, you will still receive a 19% CT relief. In turn, this makes the net cost only £81 per month. Please note that this is a huge saving of £77.93 a month. This saving equates to £935.16 over the year.

Significant savings 

A good financial adviser can advise you of the substantial savings which you can make. Please note that this comes when you attain a relevant life insurance for contractors quote and pay this through your own company.

Not only does a `Relevant Life Insurance for directors’ policy offer significant savings for you. In addition, it also offers unique advantages to directors of small businesses and contractors who look for contractor life insurance cover. Furthermore, it also gives financial protection to your family when you are no longer around.

The benefits when you take out RLP

While the life cover is personal to you, the policy counts as a genuine business expense. Therefore, when this is paid by the business it is tax-deductible. Now, let us learn more about how a Relevant Life Policy’s benefits can benefit you:

  • You will immediately save tax. This comes when the business pays the contractor life insurance cover premiums.
  • HMRC will not treat the payments as a benefit in kind. Therefore, you will not need to report the premium as a P11D benefit.
  • The premiums are not subject to NI payments for the employer or employee.
  • Your business can claim CT Tax Relief on the cost of the premiums.
  • The benefit is payable tax-free.
  • The benefit does not count towards your lifetime allowance for pension purposes.

Advice

Please note that Relevant Life Insurance should be considered when you are a contractor and are looking for contractor life insurance. Notably, there are different types of insurance for contractors in the UK, and this policy offers an excellent level of coverage for your dependents. There are also significant savings if you pay for this through your UK limited company.

Therefore, if you would like to request a relevant life insurance for directors quote on tax-efficient life insurance, please make an enquiry with our trusted partner, Broadbench. When you get in touch, you can book an appointment with one of their expert Contractor protection advisers. Please complete the form below to begin the process.

Relevant Life Insurance
Smoker Status

Frequently Asked Questions

When considering life insurance for directors, what is available? Today, directors and business owners can run their life insurance policy through their limited company. As part of this, you can provide important protection for your business or your family for the future, should the worse happen. The policy is called Relevant Life Insurance.

As a director of your own company, you can take out director life insurance in the form of a Relevant Life Insurance policy. This works in a similar way to the `Keyman’ type life insurances for bigger firms and is available to limited company directors and is very tax-efficient.
As a director of your own company, if you take out a Relevant Life Insurance policy, this is a genuine business expense. While the life cover is personal to you, the policy counts as a genuine business expense and is tax-deductible.
The key difference here is that life insurance is designed to cover the policyholder for a specific term. In contrast, life assurance usually covers the policyholder for their entire life.

Frequent searches: Relevant life insurance for contractors, Relevant life cover for directors, relevant life insurance for directors

Published On: September 25th, 2022 / Categories: Contractor Tips, Finances, Finances post, Financials, Most Read Articles, Tax Saving Guides /

Share This Guide, Choose Your Platform!

2 Comments

  1. new February 29, 2020 at 12:35 pm - Reply

    Hello there, I found your web site by way of Google while searching for a related
    matter, your website came up, it seems to be good.
    I’ve bookmarked it in my google bookmarks.
    Hello there, just turned into alert to your weblog thru
    Google, and found that it is truly informative. I’m gonna
    watch out for brussels. I will be grateful in the event you continue this in future.
    Numerous people will be benefited from your writing.
    Cheers!

    • scott291074 February 29, 2020 at 3:51 pm - Reply

      Ok, many thanks here and you are very welcome!!

Leave A Comment