Michael MacLeod, Financial Adviser
Posted in Fiducia News on 06.07.20

Background

Mr Applegate had £200,000 of life assurance on his own life for which he was paying £50 per month. This was intended to provide financial support to his wife and family in the event of his death.

Mr Applegate had previously set this up himself and had covered himself up until age 65, which was when he hoped to retire. He is 60 years old and a director of his own business.

On reflection, Mr Applegate felt it was appropriate to seek some professional advice since he was sure that there could be a better way to set up his life assurance through his business.

Problem

Mr Applegate was worried that he had not set up his policy in the most financially efficient manner, especially given that he was a business owner. He was paying for this out of personal wealth, which had already been taxed and he was frustrated that he had not taken advice prior to setting up his policy.

He also felt that whilst he could retire at age 65 it was probably more likely he would ultimately retire closer to age 70.

Solution

Case study learning points

  • Always seek advice when reviewing your protection arrangements. You are under no obligation to proceed with our recommendations.
  • When you pay for life assurance/family protection with a standard policy you do so out of personal wealth. By setting up a relevant life plan, the company can pay the premiums. This effectively means that the cost of income tax, corporation tax and National Insurance is mitigated.
  • It should be noted that this type of arrangement does not suit everyone. This case study should be used for illustration purposes only.
Michael MacLeod, Financial Adviser
Posted in Fiducia News on 06.07.20

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