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Insurance
Relevant Life Insurance for Contractors
As a contractor, ensuring financial security for your family and dependents is vital. Relevant Life Insurance offers a unique, tax-efficient solution for limited company contractors to provide 'death-in-service' benefits through their business. This policy not only protects your loved ones but also maximises the financial benefits of operating through a limited company.
What is Relevant Life Insurance?
Relevant Life Insurance is a policy set up by your company that provides a tax-free lump sum to your family or financial dependents if you pass away or are diagnosed with a terminal illness. Unlike personal life insurance, this policy is paid for by your business and counts as a tax-deductible expense, making it a smart financial move.
How Does Relevant Life Insurance Work?
Tailored coverage
If your partner works for your company (e.g., as a company secretary), they can also be covered under a separate policy.
Trust structure
Policies must be written in a discretionary trust to ensure payouts are secure and delivered to the intended recipients.
Age limit
Policies provide coverage up to age 75, ensuring long-term peace of mind.
Beneficiaries
Payouts go directly to your family, dependents, or a charity of your choice, typically free from inheritance tax.
Why Relevant Life Insurance is Ideal for Contractors
Relevant Life Insurance offers numerous benefits tailored to contractors, including:
Tax efficiency
- Premiums are considered a business expense, reducing your company's tax bill.
- Payouts are tax-free and usually exempt from inheritance tax.
Flexibility and security
- Monthly premiums are guaranteed, offering cost stability.
- Coverage can be level or increase over time, and you can adjust policies during life milestones (e.g., having children) without additional underwriting.
- Policies are transferable, meaning you can take them with you if you switch companies or move them into your personal name.
Additional benefits
- Many policies include value-added services such as access to private GPs or a second medical opinion.
- Generous coverage limits allow you to secure up to £10 million in life insurance.
What Should Contractors Be Aware Of?
While Relevant Life Insurance is a fantastic option for contractors, it does have limitations:
Joint Cover Not Available
Policies are tailored to individuals.
No Critical Illness Cover
This policy does not include payouts for critical illnesses.
Eligibility
Only UK residents employed by a UK business are eligible. Sole traders and partnerships do not qualify.
Coverage Ends at 75
Policies must cease by the insured person's 75th birthday.
End-to-End Support
From setting up your policy to transferring it or assisting your family with a claim, they simplify the process every step of the way.
By choosing Relevant Life Insurance, you're taking a proactive step to secure your family's financial future while benefiting from significant tax efficiencies. It's a win-win solution for limited company contractors who want to protect what matters most.
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