In the world of business, you, as a business owner, are no stranger to the importance of diligent strategy, savvy investments, and effective risk management. Yet, one fundamental aspect often gets sidelined in financial planning — Relevant Life Cover. This is a pivotal tool that is not just for your employees, but for you too.

Unmasking Relevant Life Cover

Relevant Life Cover, a tax-efficient life insurance policy, is custom-designed for directors and business owners. It provides a death-in-service benefit to your employees, and you, funded by the business. If the unthinkable happens, and an employee, or even yourself, passes away, this cover ensures a tax-free lump sum is delivered to the dependants. But that’s not where its benefits end — Relevant Life Cover comes with a unique set of features that make it a valuable part of your financial plan.

The Critical Benefits of Relevant Life Cover for Businesses and Owners

Cost Efficiency

Every business owner is conscious about optimising expenses. Relevant Life Cover is a shining beacon in this department. Premiums paid for this policy can be counted as an allowable business expense, leading to deductions against corporation tax. Plus, National Insurance contributions are not required for Relevant Life Cover premiums — translating into substantial savings for your business.

Personal Protection for Business Owners

As a company owner, you may currently be paying for life cover personally. Switching to Relevant Life Cover can be an excellent financial move. The cost of premiums is borne by the business and, as mentioned above, is an allowable expense. Thus, you benefit from a high degree of personal protection without the personal cost. In the unfortunate event of your death, your loved ones receive a tax-free lump sum, providing them with financial support during a tough time.

• Your policy would be wrapped in a trust at no extra cost to you. This means the policy wouldn't form part of your estate for inheritance tax purposes, further enhancing its tax efficiency.

• While the company holds the policy, you retain the freedom to designate the beneficiaries. These can be anyone of your choice, such as your family, ensuring they receive the proceeds in case of your demise.

• The proceeds of the policy are paid to the beneficiaries of the trust tax-free. This is an invaluable advantage, providing a substantial financial safety net to your loved ones during a tough time.



• The beneficiaries can be amended or changed according to alterations in circumstances or as part of tax planning strategies. This flexibility allows you to adapt the policy to best suit your evolving needs.

Benefit in Kind (BiK) Free

One of the key differentiators of Relevant Life Cover is that it’s not considered a Benefit in Kind. Standard life cover policies can lead to increased income tax liability for both you and your employees. By choosing Relevant Life Cover, you steer clear of this increased tax liability.

Employee Attraction and Retention

Providing Relevant Life Cover to your employees signals that you care about their welfare and that of their families. It serves as an attractive feature in your benefits package, helping draw in and retain talented individuals. Enhancing your team’s stability and strength, this cover can play a significant role in the growth of your business.

The Real-World Impact of Relevant Life Cover

Consider a scenario where a valued employee, let’s say John, tragically passes away. The loss is significant, emotionally and operationally. But because you’ve implemented Relevant Life Cover, John's family receives a tax-free lump sum. This financial assistance helps support them in a time of sorrow and uncertainty.

Furthermore, imagine the same scenario applied to you, as the business owner. If you had personally funded a life cover, the cost implications would have been substantial over the years. By utilising Relevant Life Cover, you can ensure that your dependants receive the same financial support, but without the heavy personal cost.

Taking the Next Step with Relevant Life Cover

Having unveiled the numerous benefits of Relevant Life Cover, the next step is to integrate it into your business strategy. At Willow Private Finance we can help you navigate through the intricacies and ensure the policy you select is ideally suited to your business needs.