No? A little-known type of life assurance policy could provide you – or your employees – with highly tax-efficient life cover.
It is very easy to see the appeal of life assurance with:
- The policy premiums paid by your employer.
- No income tax or national insurance contributions to pay on the premiums by the employer or employee.
- No lifetime pension allowance limits to worry about.
- No annual pension allowance issues.
- Benefits on death or diagnosis of a terminal illness payable under a flexible discretionary trust to your nominated beneficiaries.
- All payments normally free of inheritance tax.
These are all features of a special type of life assurance policy known as a ‘Relevant Life Policy’ (RLP).
RLPs are especially useful for:
- small companies that do not have enough employees to set up a group life scheme;
- directors and senior employees who require life cover that won’t eat into their available lifetime pension allowance;
- employees who wish to top up benefits from their existing employer’s scheme, and;
- Directors who want to set up an employer financed shareholder protection arrangement.
The savings coming from using an RLP rather than setting up personal life assurance cover and having to fund policy premiums from your net/take home pay can be significant. Take the example of a higher rate taxpaying director who needs £500,000 of cover costing £1,000 a year in premiums, RLP could almost halve the employer’s cost. RLPs are subject to some special rules and one example of this is that the policy cannot run beyond the employee’s 75th birthday.
For more details of RLPs and a personal quotation showing the potential savings, or for all of your Life Assurance and Protection needs please contact us.
Please Note: The Financial Conduct Authority does not regulate tax and trust advice. Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. Tax laws can change. Occupational pension schemes are regulated by The Pensions Regulator.
