Relevant Life Insurance for Dentists Operating Through a Company
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Is Relevant Life suitable for your Dental Practice?
Many dentists operating through a limited company look for ways to structure life insurance more efficiently.
Instead of arranging personal cover, Relevant Life Insurance allows life cover to be set up through the company in a way that may be more tax-efficient depending on circumstances.
This is particularly relevant for dentists with:
- private income
- incorporated practice structures
- retained company profits
This guide explains how Relevant Life Insurance works and why it is commonly used by dentists operating through a company.
Many dentists structure their income through companies for reasons such as:
- running a private dental practice
- carrying out private dentistry alongside NHS work
- operating as a consultant or specialist through a company
- tax planning and flexibility around income
Income may be taken as a mix of:
- salary
- dividends
- retained profits
When life insurance is arranged personally, the premiums are normally paid from after-tax income, which can make protection more expensive than necessary.
Relevant Life policies are commonly used by:
- principal dentists who run private practices through companies
- associate dentists operating via a limited company
- specialist dentists or consultants with company income
- company directors within dental groups
It is generally designed for individuals who earn income through a company rather than purely as employees.
A typical structure involves three parties:
The company
Pays the policy premiums.
The insured individual
Usually a director or employee of the company.
The beneficiaries
Family members who receive the benefit through a trust.
This structure helps ensure the payout goes directly to the intended beneficiaries.
The Key Benefits for Dentists
For dentists who operate through companies, Relevant Life Insurance can offer several potential advantages.
Instead of paying personally, the company may cover the cost of the premiums.
This can make protection more affordable compared with arranging life cover from personal income.
In many cases, premiums paid by the company may be treated as an allowable business expense, although this depends on individual circumstances and tax treatment at the time.
This can mean the effective cost of life cover is lower than an equivalent personal policy.
Relevant Life policies are usually written in trust, which means the payout may sit outside the individual’s estate for inheritance tax purposes.
This can help ensure funds reach beneficiaries more efficiently.
Example Scenario
A dentist runs a private dental practice through a limited company and draws income through a combination of salary and dividends.
They want to ensure their family would be financially supported if something were to happen to them.
Instead of arranging a personal life insurance policy funded from personal income, they arrange Relevant Life Insurance through their company.
The premiums are paid by the business, and the policy is placed into a trust for the benefit of their family.
Key Considerations for Dentists
Before arranging Relevant Life Insurance, dentists usually consider:
- whether they operate through a limited company
- how their income is structured
- the level of protection their family would need
- how protection fits with their wider financial planning
Because tax treatment can vary depending on circumstances, professional advice is usually recommended when structuring policies through a company.
Speak to a Broadbench Specialist
Dentists often have complex income structures involving private practice, company income, and partnerships.
Understanding how protection can be structured through those arrangements can help ensure both the individual and their family are properly protected.
If you would like to discuss protection planning for your situation, a specialist Broadbench adviser can help review the options available.
FAQs
Can dentists pay for life insurance through their company?
In some cases, yes. Relevant Life Insurance allows certain types of life cover to be arranged through a limited company rather than personally.
Is Relevant Life Insurance tax efficient?
Many professionals use Relevant Life policies because they can offer potential tax efficiencies compared with personal life insurance. However, the tax treatment depends on individual circumstances and should be reviewed with an adviser.
Related Guide: Tax Efficient Strategies for Clinicians
Is Relevant Life Insurance suitable for associate dentists?
It can be suitable for associate dentists who operate through their own limited companies rather than being directly employed.
Can a dental practice pay for Relevant Life Insurance for its directors?
In many cases, companies can arrange Relevant Life policies for directors or employees as part of their financial protection planning.
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