Maximizing Employee Benefits with Relevant Life Policy

As a business owner, you know how important it is to provide your employees with comprehensive benefits that not only attract but also retain top talent. One benefit that you may not have considered is a Relevant Life Policy (RLP). This unique life insurance policy is designed specifically for small businesses to offer an affordable and tax-efficient life cover to their employees. In this article, we’ll explore what a Relevant Life Policy is and how it can benefit your business and employees.

What is a Relevant Life Policy?

A Relevant Life Policy is a life insurance policy taken out by a company on behalf of its employees. It offers a tax-efficient way to provide death-in-service benefits to employees, which is not subject to inheritance tax. The policy pays out a tax-free lump sum to the employee’s family or beneficiaries if they die while employed by the company.

How does it work?

The company pays the premiums for the policy, which are considered an allowable business expense, and are not subject to National Insurance Contributions. This means that the company can save up to 50% on the cost of providing the benefit compared to an individual life policy. The employee is the named beneficiary of the policy, and the payout is tax-free to their family or beneficiaries.

Who is eligible?

RLPs are suitable for small businesses, partnerships, and sole traders who wish to provide their employees with life insurance cover but do not have enough employees to warrant a group life policy. The policy is available to employees who are on the company’s payroll, including directors, executives, and employees on fixed-term contracts.

What are the benefits?

1. Tax-efficient – The premiums are tax-deductible as an allowable business expense, and the payout is not subject to inheritance tax.
2. Cost-effective – The policy can provide the same level of cover as an individual life policy but at a significantly lower cost to the company.
3. Attractive benefit – Providing a Relevant Life Policy as part of your employee benefits package can help attract and retain top talent.
4. Portable benefit – The policy is owned by the employee and is not tied to their employment, meaning they can take it with them if they leave the company.
5. Confidentiality – The policy is confidential, and the employee’s beneficiaries do not have to disclose the payout as part of their estate, unlike a group life policy.

In conclusion, a Relevant Life Policy is a tax-efficient and cost-effective way for small businesses to provide death-in-service benefits to their employees. By offering this attractive benefit, businesses can attract and retain top talent while providing peace of mind to employees and their families. If you’re interested in learning more about Relevant Life Policies, speak to a financial advisor who can help you understand if it’s the right fit for your business.