A Relevant Life Policy is used in order for a small to medium business employer to give their individual employees a death in service benefit. It is more beneficial for those businesses who don’t have enough employees to create a group scheme and it is often used to insure the business owners in a highly tax-efficient manner.
These policies are owned by the business itself. The policy is written into trust and will pay out to the employee in case of a critical illness or terminal illness. However, if the worst was to happen the beneficiaries of the employee would recieve the payout. However, you have to ensure that all of the policies are up to date as otherwise there would be no payout.
Those who have a group scheme in place can still arrange additional Relevant Life Policies. This is normally used for high earning employees due to their tax efficient nature.
Relevant Life Policies are very tax efficient as it is seen as an allowable business expense and could save a company Director more than 50% in tax.
Up until very recently, Relevant Life Policies would only pay out on death or diagnosis of being terminally ill. However, there are even more savings to be made for Company Directors due to the fact that some providers have started to include Critical Illness in their policies as well.
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