Relevant Life Cover
How Relevant Life Cover can save you and your company cash
Relevant Life Cover is a personal life insurance policy which can be treated as an allowable business expense, so the business would qualify for Corporation Tax relief. It is not a P11d so there is no additional Income Tax or NI to pay. If the insured passes away, the cover pays out a tax-free lump sum benefit to financially support the loved ones of the deceased.
How much does it cost?
To give you an idea of both the cost and savings you can make, we have obtained a quote for providing £1,000,000 of cover until you reach age 60. The monthly indicative premium comes to £100 per month. The premium assumes that you are in good health and a non-smoker. This premium is guaranteed to remain at the same level throughout the term of the policy and you can cancel it at any time, without exit charges.
How much can I save?
Based on your current circumstances, if the business pays the premium instead of you, you will make a saving when comparing it to paying the premium personally.
Why is life insurance important?
If you don’t have any debts or expenses to consider, you may not need life insurance, however, if you are a business owner who is worried about your loved ones struggling financially should you pass away, Relevant Life Cover is a tax-efficient option to protect those left behind.
Frequently asked questions
Can it be converted into a personal policy if I exit the business?
Most insurers now offer the option to convert your relevant life insurance to a personal policy. Usually, there is a short form to be completed and a new direct debit to set up.
What is the maximum amount of cover I can get?
The level of cover is generally defined as a multiple of salary. Although it can vary, most providers allow you to cover up to 30 times your total remuneration which can include your salary and dividend payments.
Can I include Critical Illness Cover?
No, it is our understanding of current tax legislation that you cannot include Critical Illness Cover.
Doing so negates the tax-efficient nature of the relevant life cover because HMRC has not signed this off as an allowable business expense.
What you may be interested in is a policy known as Executive Income Protection. If you become too ill or injured to work, it kicks in after a set waiting period to pay up to 80% of your remuneration (i.e. salary and dividends).
How do I establish the right amount of cover?
It is important to understand how each scenario will affect you. As it is a dynamic insurance with lots of factors to consider, we would need to complete an income, expenditure, asset and liability analysis for you. The outcome of this analysis will show a colourful chart of the effects, of your net worth over time and ultimately work out the cover needed should there be a shortfall.
What are the benefits of speaking to CBW's business protection advisers?
- Save you time – Being a specialist protection insurance advisers, we know all the products inside out, saving you time in finding the right policy.
- Save you money – Our team is independent, so can research the whole market to ensure you gain the most competitive long-term premiums.
- Access more insurers – Some insurers do not allow their policies to be quoted online so you can access a wider number of options by speaking to us.
Contact us
CBW Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. FCA registered number is 182357. Registered in England. Registered number is 3224548. Registered office is 10 Lower Thames Street, London, EC3R 6AF. CBW Financial Planning Limited is a related business of CBW 2022 LLP. The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren’t able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk. The value of investments and the income from them can fall as well as rise. You may get back less than you originally invested. Past performance is not a reliable indicator of future results.
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