Relevant Life Plans
A Relevant Life Plan is a term assurance plan available to employers to provide an individual death in service benefit for an employee. It is designed to pay a lump sum if the employee dies whilst employed for the length of the policy. It will also pay out if the employee, whilst employed, is diagnosed with a terminal illness and meets our definition at any time during cover. A Relevant Life Plan is paid for by the Employer.
What Makes it Cost Effective?
Relevant Life Plans are similar to most other types of life cover except they aim to provide a tax efficient benefit provided by an employer for an employee.
Tax Benefits
Employer benefits:
- Corporation tax relief (so long as the premiums are wholly and exclusively for the purposes of the business)
- No National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy
Employee benefits:
- No National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy
- The policy payments won’t be taxed as a benefit in kind
- Policy payments and benefits don’t count towards annual or lifetime pension allowances
Relevant Life Plan Trust
A Relevant Life Plan is designed to be written in a discretionary trust at outset, with the employee’s family and dependants as beneficiaries – this also removes the benefit amount from the insured person’s estate which means that it can mitigate inheritance tax on death of the insured.
Wills and inheritance tax are not regulated by the Financial Conduct Authority.
