No one likes paying for insurance, but most people want to ensure their family is protected should the worst happen and they die suddenly.
If you’re a director of a limited company, no matter whether that business is tiny or a member of the FTSE 100, we have some good news for you; the taxman (Her Majesty’s Revenue and Customs to give them their full and correct name) can effectively pay part of the bill for you.
How does it work?
If you have life cover, which gives a lump sum to your financial dependents if you die, the chances are you pay the premiums from your bank account, out of net pay. In other words, after Income Tax and National Insurance has been deducted.
However, if you are a company director there is another option, which could help reduce the cost of your life cover, or indeed allow you to be insured for a higher amount, therefore giving your family even more peace of mind.
It’s called a Relevant Life policy and whilst it does the same job of traditional life insurance; putting money in the hands of your financial dependents should you die, the taxman effectively pays part of the premium.
Unlike a traditional life insurance plans the premiums are paid by your business. This means they are treated as a business expense, reducing your profit and consequently your tax bill.
The effective saving is usually equivalent to the rate of Corporation Tax you pay, generally 20%.
How can you benefit?
In simple terms, talk to us.
We can explain in more detail how Relevant Life policies work and whether or not they are appropriate for your circumstances. A Relevant Life Plan is designed to be written in a trust for the benefit of your beneficiaries.
There are other factors you should think about too, such as the amount of cover you need, the length of time the policy should last for and which is the most appropriate insurer.
We’re here to help, call us on 01925 837736 we would love to have a chat.
Please note, his information is based on our understanding of current legislation, taxation law and practice, which may change.