Relevant Life Cover Policies

What is Relevant Life Cover?

Relevant life cover allows you to protect your dependents in a way that mirrors the death in service benefits that you used to have as a permanent employee.

Until recently, employer funded life insurance was only available to large businesses in the form of a ‘group life’ scheme for all employees. With a minimum number of insured persons and prohibitive cost this was not realistic as an option for Contractors. A recent development in the use of trusts means that smaller companies now have the chance to tax efficiently provide death in service benefits for their employees. 

How does a Relevant Life Cover Policy work?

  • If you have a partner who receives an income from the company then you can tailor the policies to cover you both individually as long as they are an employee of the company, for example a company secretary.
  • This life cover will pay out a lump sum in the event of your death up to age 75 and can offer you the peace of mind that your family, an individual or a charity of your choice will be looked after.

Why choose a Relevant Life Cover Policy?  

  • Contractors using a One Man Ltd company can transfer the cost of life insurance to your business rather than find the cost personally from your post-tax income. In this way the new plan offers you substantial savings on any existing life cover that you pay for personally.
  • It should also be possible to offset the premiums against corporation tax as a business expense, find out more on saving tax on your relevant life insurance here.
  • As you pay the premiums from your company, the overall cost to you can be significantly less when compared to paying mainstream policies from your personal bank account. Typically a ‘net’ £20pm premium would entail a higher rate tax payer having to find £30pm gross whereas the £20 cost can instead be met direct from company.
  • Unlike the old company sponsored ‘Key-man’ insurance policies, where any pay-out on death belonged to the company and your dependents were taxed on the receipt of funds, this new policy is kept in trust to protect your dependents.
  • An added bonus is that in most cases the benefits won’t be liable for inheritance tax as long as they are payable through a simple discretionary trust.
  • Even if you decide to return to permanent employment, you can still benefit from the tax savings by simply transferring your policy to your new employer. Your cover is written in trust and this not only keeps the money safe from any liabilities that the new company has but also makes the plan easier to transfer.
  • You can pay the policy personally and this means that, unlike traditional death in service cover that is non-transferrable by the employee, this policy can be kept in place irrespective of who you work for.
  • Irrespective of any health issues that arise, you will not be medically underwritten again with this cover and so the policy can remain intact, providing continuity to the protection that your dependents need using what can be a highly tax efficient arrangement.

Why apply through the ContractorUK?

ContractorUK recognised the need to offer our members Independent Financial Advice tailored to Contractors and teamed up with CMME over a decade ago to fulfil this need.

  • CMME specialise in finding the right insurance to suit your individual needs as a Contractor and aim to provide this essential cover for you at an affordable price.
  • The award winning protection team at CMME have been awarded several accolades including best intermediary and young adviser of the year and have helped thousands of Contractors to protect their families.
  • The Advisers can recommend a variety of life cover policies which can be used in various ways to suit your needs. They personally negotiated this specialist Relevant Life cover with a major UK provider in order to fulfil the needs of Contractors.
  • CMME are Independent Financial Advisers so they are able to search the whole of the market to find the best cover for your needs.
  • They only work with insurers that have a good history of paying claims and offer affordable cover for the duration of your time contracting.
  • The advisers at CMME can handle the whole application process for you, from setting up the policy initially to transferring it to a new trustee or helping your family to make a claim if the worst should happen. 

For more detailed information and a quotation based on your needs please contact CMME by completing the form below and an adviser will be in touch.

For more information on Relevant life cover click here.

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