Why would I need a relevant life policy?

If you are a company director and you have personal life cover to protect your family and dependents then you could be paying more tax than you need to.

If you pay for life cover from your own bank account then you will be paying from post tax income after suffering tax and national insurance, and if you are paying from the business account you will be taxed on the payment as if it were income.

How is it different to death in service benefits?

Death in service benefits are written under a pension trust, and are subject to the same tax regime as all registered pension schemes but the limiting factor is that the maximum level of cover permitted is four times salary. Furthermore, any payment from an insurer under a death claim counts towards that individual’s pension lifetime allowance and so a tax charge could apply.

A key differentiator with a relevant life policy over death in service benefits is that the level of cover is not restricted to a maximum of 4 times salary, and any benefit claim does count towards your pension lifetime allowance, but this type of live cover enjoys similar tax breaks as a group life policy.

More on relevant life policies…

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