Are you an owner of a start-up and have plans to expand your business in the future? If yes, then providing death-in-service benefit to each of your employees can turn out to be a bit hectic. Even if it seems manageable during the initial days, it will cost you a lot with the growing number of workers. In a situation like this, relevant life policy, which is exclusively designed for those employers who want to render death-in-service benefits to his employees, acts as a lifesaver. So, if you are not quite clear about the features and benefits of a relevant life cover, they have been discussed here in detail.
Features -
1. You must have at least five employees to apply for this type of cover.
2. You will get to enjoy the facilities of this cover till your 75th birthday. The protection will not be there after the policyholder becomes 75 years old.
3. If you have a limited number of employees and you can’t apply for a registered group life scheme, this type of cover can be the ideal solution for you.
4. Usually, the company/employer establishes a discretionary trust and the payouts are made through this trust, after the death of an employee.
5. The policy does not involve any surrender value.
Having mentioned the salient features of relevant life cover, now let’s look into the wide range of benefits that you will get if you opt for this type of a policy.
1. One of the greatest advantages of this type of cover is that the premiums are tax free since the payouts are not considered as benefits in kind. Earlier, when people wanted to obtain such a policy, they either had to do it from the post-tax income or else had to pay it from the account of the company. These premiums also involved serious tax restrictions. Moreover, the employer is also relieved of the corporation tax burden as the premiums are considered as a part of the trade expenses.
2. People with high earnings can keep it separate from their annual allowances or pension funds.
3. The employer can save substantial costs since there are no P11D charges.
4. The premiums that are paid for this policy are not subject to the National Insurance contributions. The benefits are free of inheritance tax as well.
5. Since the money is transferred through a discretionary trust, the proceeds are sent to the proper person at the given time. There is no chance of the money going to the wrong persons. The nominee doesn’t receive the money if he/she is not an adult. In that case, the money is given to a nominated guardian and he is supposed to keep the money till the nominee grows up.
The policyholder can also leave behind a letter of wishes in which he can clearly mention who will be the one to receive the payouts after his death. Consider hiring a legal advisor who will guide you how to draft these important documents. You can also make any necessary changes whenever you wish to.
