Friday, July 1, 2022

Relevant life insurance: what is it and why should you consider it?

Whenever you are looking for insurance, the number of different choices on offer can seem overwhelming. The different rates, the different types of coverage provided, the different charges and conditions…it can almost feel like someone is trying to talk you out of taking out a policy.

But everything that we have been through since March 2020 has shown us just how important it is to have a comprehensive insurance policy that will provide for us and for our families in the event of tragedy.

And life insurance policies can be some of the most complex of all. There are so many different factors to consider, including age, lifestyle, profession, family history and so on.

There are the various options for terms, or you could opt for whole of life, or maybe you’d rather take out a joint policy with your partner. What’s more, there’s also tax to consider when you’re thinking about which policy is the best fit for you.

If you are the owner or director of a company, or the employee of a limited company, then a Relevant Life Insurance policy could be the best fit. Let’s break down what that term means and why it could benefit you.

What Is Relevant Life Insurance?

Relevant Life Insurance plans are a death-in-service benefit plan that is, in essence, pretty simple. The policy pays out a tax-free lump sum to the policy holder’s beneficiary or beneficiaries either on the diagnosis of a terminal illness or in the event of their death. It is a policy that is designed for small businesses and their employees and owners, and there are several criteria that need to be met.

The policy is set up in tandem with a trust. The trust makes sure that the payment does not come through the deceased’s estate or the business they worked for, which means that there is no tax on the lump sum. It is also a tax-deductible business expense, and it is not factored into any National Insurance calculations for either the employer or employee.

Who Can Apply For Relevant Life Insurance?

Relevant Life Insurance policies are useful for small businesses because they may not have the requisite number of staff members for a group death in service insurance plan. They are also favoured by people who are high earners and who have a hefty chunk of money already in their pension plans.

This is because, as previously mentioned, the insurance pay-out comes through the trust and is therefore tax-free. Contractors and company directors are also very likely to benefit from the advantages of having a relevant life insurance policy. It should be noted that this policy is only available to people under the age of 75, and that there are other specific criteria that will have to be met.

Where Can I Find Relevant Life Insurance?

As with any insurance policy, you will find that rates and benefits vary from provider to provider. You will need to answer the same questions and provide the same documentation as you would for a personal life insurance policy, but one of the most important things to consider is what the most important factor is for you when it comes to the pay-out. Are you going to be looking for the highest pay-out and paying in as much as you can? Or are you looking for a provider that offers more benefits and support services?

Many providers will provide an additional benefits package along with their policy, and this is something to seriously consider. Examples of the kind of benefits you could be looking at include bereavement support for your loved ones, counselling sessions, and/or a funeral pledge. They may also offer expert doctors for a second opinion. If you are wondering where the best place is to start looking for a Relevant Life Insurance provider, Drewberry has a wealth of information on the kind of return you could be looking at and how it compares to other life insurance policies.

What Makes Relevant Life Insurance Such A Good Choice?

Let’s start with the most important reason for taking out life insurance: knowing that you are providing for your family and loved ones in the event of a worst-case scenario. But it’s not just about giving them an extra financial life jacket. Relevant Life Insurance is a particularly excellent choice for business owners because the pay-out provides an invaluable cushion in case there are any outstanding business debts when they pass away.

Many small businesses have found themselves in debt and needing outside financial help during the course of the pandemic, and it goes without saying that the sudden passing of the head of a company that owes a lot of debt makes things extremely difficult. With a Relevant Life Insurance policy, you can also split the beneficiaries, giving your successor a bit of extra breathing room to keep the company afloat.

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