The Importance of Relevant Life Assurance for Limited Company Owners

When it comes to safeguarding the future of your business and loved ones, life assurance is often a priority. For limited company owners, Relevant Life Assurance offers an efficient and potentially tax-advantageous solution. Unlike traditional life insurance, this policy is designed specifically for directors and employees of small to medium-sized enterprises (SMEs). Here, we’ll explore why this type of cover is vital and highlight its unique advantages.

What is Relevant Life Assurance?

Relevant Life Assurance is a type of life insurance policy arranged through your limited company. It’s designed to provide a payout to the insured person’s family or dependents in the event of death, much like personal life insurance. However, the key difference is that the premiums are paid by the company, making it a more tax-efficient option.

Why Limited Company Owners Should Consider Relevant Life Assurance

As a limited company owner, you have multiple responsibilities—from running a successful business to ensuring your family is financially secure. Relevant Life Assurance provides an essential safety net without the drawbacks associated with personal life insurance. Here are the key reasons why it should be on your radar:

1. Flexibility in Cover

Relevant Life Assurance policies offer flexibility in terms of the coverage amount and the length of the policy, which can be tailored to your individual and business needs. Unlike a group life scheme, where employees typically share a standard policy, this cover is specific to the policyholder and can be adjusted accordingly.

2. No Impact on Personal Allowance

For limited company directors, Relevant Life Insurance does not count towards your personal annual or lifetime pension allowance. This is especially beneficial for higher earners who are close to exceeding these thresholds.

3. Cover for Key Individuals

If you have key employees who play a significant role in the success of your business, offering them Relevant Life Cover can be a valuable part of their benefits package. Not only does it help attract and retain talent, but it also ensures that your company can provide financial support to their families in case the worst happens.

4. Tax Efficiency

Unlike personal life insurance, which is paid with post-tax income, Relevant Life Insurance premiums are usually considered a business expense. This means that your company can deduct the premiums as a legitimate business cost (so long as qualifying rules are met by the policy, which can be confirmed with your local tax adviser), resulting in savings on corporation tax. Additionally, the premiums are not taxed as a benefit in kind (BIK), meaning they do not appear on your P11D.

5. Comprehensive Death-in-Service Cover

Relevant Life Assurance offers all the advantages of a death-in-service benefit, usually found in larger companies’ group life schemes. However, SMEs and even single directors of limited companies can take advantage of this without needing to set up a full group scheme.

Conclusion

For limited company owners, Relevant Life Assurance is a good way to protect both your business and personal interests. It offers tax efficiency, flexibility, and financial peace of mind—all without the heavy tax burden that often accompanies personal life insurance policies. Whether you’re looking to safeguard your own family or extend a valuable benefit to key employees, this type of cover can be a game-changer.

To speak to us about your options, please contact us at advice@larkbridge.co.uk or call 01284 729250.

Alternatively, you can book a meeting via our Book A Meeting link at the top of this page.