Relevant Life Insurance known as RLP or Relevant Life Plan
Relevant life insurance is a type of policy that a business can take out to provide life insurance for an individual employee. It's an alternative way employers can provide death-in-service benefits for employees outside of a registered group life scheme.
It's applicable to staff members or employees of the business.
It has exactly the same benefits as standard or personal life insurance plan, in that, the beneficiaries, i.e., the insured's family or loved ones would receive an untaxed lump sum of cash if the insured died during the term of the policy.
If you're a limited company director, you will be pleased to hear that rather than funding the costs of a life cover policy from your personal or post-tax income, your company can fund a relevant life policy.
A sole trader in their personal capacity as a business owner is not eligible to take out relevant life cover, as a sole trader is not a legal entity and cannot get a policy through the business. However, a sole trader business owner can apply for a policy on behalf of an employee, for example, some sole traders would have their wife or husband on payroll as admin or secretary, therefore, they'd be entitled to apply for a relevant life insurance plan on their behalf.
The monthly premiums for relevant life insurance count as a tax deductible business expense. Personal life insurance premiums do not receive tax relief!
A lot of people that I inform, explain that they already have life insurance, advising that their account will sort it out for them.
Do not confuse the two.
Brokers have to be qualified in business protection in order to set Relevant Life Insurance up, let alone give advice on it.
There are very few brokers in Northern Ireland that specialise in business protection.
More food for thought, I came across a couple in business, two directors, husband and wife, they were spending around £50 each on personal life insurance.
The husband explained that £100 between the two wasn't much to consider in terms of putting through the business in comparison to other costs.
I illustrated that they had 20 years left on the policy, if they didn't claim that would be £100 per month, multiplied by 240 months, which would equate to a total spend £24'000 out of his personal income. When he realised that he was on the higher tax band and we calculated the savings, the penny dropped.
If you'd like me to review your policies to calculate how much you could be saving, get in touch.