John Millican, Managing Director and Financial Adviser
Posted in Protection on 16.12.11

Relevant Life Policies

Many employers have key people whose death or illness will impact on the profitability of the business. For such people key person insurance exists to enable the company to provide itself with financial protection at such a difficult time.

But what about the key person’s family and dependants?  They will probably also have severe financial challenges to address at such time.  For such people help is at hand in the shape of a Relevant Life Policy (“RLP”).

This is a policy which is taken out by an employer on the life of an employee on a single life basis, to an age not exceeding 75 and written in trust for the employee’s family.  This means that in the event of the employee’s death, a substantial cash sum can be made available quickly for the employee’s family.  And that’s not all – there are considerable tax benefits.

For example:-

  • the employer will usually get tax relief on premium payments because they will be treated as a qualifying trade expense;
  • the employee will not be assessed to income tax or National Insurance on the premiums paid;
  • the death benefits will be free of income tax and are likely to be paid free of inheritance tax; and
  • neither the premiums nor the death benefits will have any impact on the employee’s annual allowance or lifetime allowance for pension purposes

For employers, such an arrangement can also act as a substantial employee benefit for attracting quality employees to a business.  The fact that RLPs fall outside the scope of the Lifetime Allowance charge, unlike Death in Service schemes which are formed under pensions rules, can make them particularly advantageous for employees with high earnings and/or large pension funds that would otherwise exceed the Lifetime Allowance (£1.5million from April 2012) on death.

ACTION:

Please call us for more information on this attractive and increasingly popular form of planning. 

If you would like to know more about how we as Financial Advisers can help you secure peace of mind by ensuring your family are well protected in all eventualities  then visit the Protecting Your Family section of  our website: Protecting Your Family or send us email at: email@fiduciawealth.co.uk

The information contained in website is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occasioned in connection with the content hereof and any such action or inaction. Professional financial advice is necessary for every case.

Fiducia are an award winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

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John Millican, Managing Director and Financial Adviser
Posted in Protection on 16.12.11