Directors and key employees are essential to the success of any business. Protecting them against unforeseen events such as death or critical illness is not only prudent but can also safeguard the financial stability of the company. One of the most effective ways to do this is through a Relevant Life Policy (RLP), a form of life insurance designed specifically for company directors and employees.
At Howard Wright Financial Planning, our team help businesses implement tax-efficient protection strategies using relevant life policies, ensuring both the business and beneficiaries are protected.
What is a Relevant Life Policy?
A Relevant Life Policy is a life insurance policy arranged by a company for an employee, director, or key person. The policy pays a tax-free lump sum to nominated beneficiaries in the event of death and can also be structured to provide cover for critical illness.
Key features of relevant life policies:
- Premiums are paid by the company and are usually corporation tax-deductible
- Benefits are paid tax-free to beneficiaries
- Policies can cover a single individual or multiple key staff members
- Provides a cost-effective alternative to personal life insurance for company directors
Why Directors and Businesses Should Consider RLPs
1. Tax-Efficient Protection
Unlike personal life insurance, a relevant life policy allows the company to claim tax relief on premiums, reducing the overall cost of cover while ensuring that beneficiaries receive a tax-free payout.
2. Protects Key Individuals and Their Families
An RLP ensures that the director’s or key employee’s family is financially protected in the event of their death, providing peace of mind both for the individual and the business.
3. Supports Business Continuity
In some cases, the policy can be linked to shareholder or partnership protection, helping the company fund share buyouts and succession plans without straining company finances.
4. Flexible and Tailored Cover
Policies can be tailored to reflect the individual’s role, the company’s financial position, and specific objectives, making them highly flexible for directors and key staff.
How to Choose the Right Policy For Your Business
Choosing the right relevant life policy depends on several factors:
- The individual’s role and contribution to the business
- The desired level of cover and term length
- The company’s tax position and financial objectives
- Succession planning or shareholder protection needs
A Chartered Financial Planner can provide guidance on structuring a policy that meets your business requirements while offering maximum tax efficiency.
Take Control of Your Business Protection
Relevant life policies are not a one size fits all solution. At Howard Wright, we tailor our advice to your company’s unique needs, ensuring your directors, key employees and their families are safeguarded, while optimising tax benefits for your business.
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Contact our team of Chartered Financial Advisers on 0345 688 4939 or use our 20-second enquiry form to discuss how relevant life policies can provide tax-efficient protection for your business and key people. We look forward to hearing from you and showing how our award winning team can help protect your company and its most valuable assets.
Disclaimer: The information provided in this blog is for general guidance only and does not constitute financial advice. We recommend seeking personalised advice from a qualified financial planner. Past performance is not indicative of future results. The value of investments can go down as well as up, and you may not get back the amount originally invested.
By choosing Howard Wright, you’re not just arranging life insurance; you’re investing in your business’s stability, continuity, and peace of mind. Contact us today to get started.