If you're a business owner, you may be looking for ways to provide financial protection for your employees and their families. One option you might consider is relevant life insurance, which is a type of term assurance policy designed specifically for businesses.

Here are a few reasons why relevant life insurance can be a great option for you and your employees, along with some examples to illustrate how it works.

First, relevant life insurance is tax-friendly.

Premiums paid by the employer can be offset against corporation tax as long as the policy is part of the employee's remuneration package. This means that the business can claim a tax deduction on the premiums it pays for relevant life insurance. Additionally, businesses do not have to pay National Insurance contributions on relevant life premiums, which further reduces the overall cost of this type of insurance.

For example, let's say you own a small business and you want to provide life insurance coverage for your employees. You decide to purchase a relevant life insurance policy for each of your employees, with a sum assured of £100,000. As the employer, you can offset the annual premium against your corporation tax, saving your business money on taxes. Additionally, you don't have to pay any National Insurance contributions on the premiums, further reducing the overall cost of the insurance for your business.

In the event of a valid claim being made, the cash sum paid out under a relevant life insurance policy should be free from UK income tax, National Insurance, and capital gains tax. When the employer sets up a relevant life policy written in trust, the benefits paid should not be included in the deceased's estate and therefore should not be liable for inheritance tax.

For example, let's say one of your employees passes away and their relevant life insurance policy pays out the sum assured of £100,000 to their spouse. The spouse would not have to pay any income tax or National Insurance on the benefit received.

Additionally, the benefit would not be included in the deceased employee's estate for inheritance tax purposes, providing additional financial protection for the employee's family.

Overall, relevant life insurance can be a valuable benefit for business owners and their employees. It provides financial protection for the employee's family and can also offer tax advantages for both the employer and employee. It is a flexible and cost-effective way for businesses to provide life insurance coverage for their employees, while also reducing their own tax liabilities. If you're a business owner looking to provide life insurance coverage for your employees, relevant life insurance may be a good option to consider.

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