What is Relevant Life Insurance?
Relevant Life Insurance (RLI) is a specialized life insurance policy designed for employers to provide life cover for their employees, including directors and key employees. Unlike traditional group life insurance policies, Relevant Life Insurance is typically set up as an individual policy for each employee, making it a more flexible and tax-efficient solution.
The Significance of Relevant Life Insurance
One of the primary benefits of RLI is its tax efficiency. Premiums paid by the employer are typically treated as a business expense and are not subject to income tax or National Insurance contributions.
RLI provides a tailored life insurance policy for each employee, ensuring that the coverage meets their specific needs.
In the event of the employee’s passing, the tax-free lump sum is paid directly to the nominated beneficiaries, providing financial security to their loved ones.
Offering RLI can be a valuable addition to your employee benefits package, helping attract and retain top talent.
How Does Relevant Life Insurance Work?
- Employer Setup: The employer sets up a Relevant Life Insurance policy for eligible employees, including directors and key personnel.
- Customized Coverage: Each employee’s policy is tailored to their individual needs, with the employer choosing the benefit amount and policy term.
- Premium Payments: The employer pays the monthly or annual premiums for each policy. These premiums are typically treated as a business expense.
- Tax Savings: Premiums are not subject to income tax or National Insurance contributions, resulting in potential tax savings for the business.
- Employee Protection: In the event of an employee’s passing during the policy term, the tax-free lump sum benefit is paid to the employee’s nominated beneficiaries.
- Flexible Beneficiaries: The employee can nominate beneficiaries of their choice, such as family members or dependents.
Advantages of Relevant Life Insurance
- Tax Efficiency: Significant potential tax savings for both the employer and employees.
- Individualized Coverage: Tailored policies that meet each employee’s unique needs.
- Competitive Benefit: Enhances your employee benefits package, aiding in talent attraction and retention.
- Legal and Tax Compliance: Complies with UK tax and legal requirements, providing peace of mind to businesses.
- Direct Beneficiary Payout: The lump sum is paid directly to the beneficiaries, ensuring swift access to funds.
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