Life Insurance is Life Insurance, isn’t it? Not if you’re a company director. 

When you started your business or became the director of a company, you were likely inspired by many positives. Being your own boss, growing a brand you care about and earning more money. But then the realities of being a company director kicked in. The long hours, accountability and ongoing costs to name but a few. So how about we take you back to those optimistic early days and look at one of the benefits of your role you may have overlooked – tax-efficient life insurance.

Here are 6 reasons you should explore life insurance specially tailored to company directors, also known as Relevant Life Insurance.

1. Death-in-service benefit

Relevant Life Insurance gives your employees a fantastic death-in-service benefit, keeping your team engaged and feeling valued. 

2. You save money right away

While you might find yourself looking longingly at the benefits enjoyed by the PAYE crowd on occasion, whether it’s paid leave or pension contributions, there’s something you have access to that they don’t. Unlike salaried employees who must pay for life insurance out of their own pocket, you can pay the premiums through your business. Doing so means you can reduce your personal outgoings by hundreds if not thousands of pounds per year. As an example, take a look at this illustration of the difference in cost…

3. There’s no impact on your existing benefits

Of course, you enjoy many other perks as a company director, whether it’s a company car or private healthcare. While those may incur tax, Relevant Life Insurance isn’t treated as a benefit-in-kind, nor is it included as a P11D benefit, so it doesn’t interfere with your existing benefits or lifetime allowance.  

4. NI doesn’t apply

Unlike your salary or bonus, Relevant Life Insurance premiums aren’t subject to National Insurance payments. This makes them a more cost-effective option, helping you make further savings over standard life insurance.

5. You can claim tax relief

If you’re not sold already, how about this… Paying your Relevant Life Insurance premiums through your business means you can also claim Corporation Tax Relief on them, making them a hugely tax-efficient way to protect your loved ones.

6. It’s a flexible, tax-free payout

The icing on the cake? There’s no tax to pay on a Relevant Life Insurance payout and no restrictions at to what the money can be used for. As a result, it’s enables those in receipt of the benefit to save money and achieve greater flexibility when it comes to meeting their immediate needs in the event of your death, from funeral planning to paying off the mortgage.

Cost-effective, tax-efficient life insurance for company directors

So, there you have it, Relevant Life Insurance or Director’s Life Insurance is a simple and effective way to save money and tax. It also works particularly well as a ‘Death in Service’ benefit, especially if you don’t have enough staff to set up a group scheme. It allows you to insure up to 25 times your annual remuneration, making for a significant payout, and has a number of other useful features. For instance, most policies automatically include terminal illness cover, meaning the payout is made before the person passes away, making it easier to determine the appropriate use of funds. 

Time to get tax-savvy?

If you’d like to organise Relevant Life Insurance or simply find out more about the benefits to company directors, get in touch with one of our expert advisers to discuss your specific requirements.

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