If you have ever wondered the difference between Relevant Life Insurance and ‘normal’ life insurance - you wouldn’t be the first! We aren’t delusional though, ‘life insurance’ is not the most exciting topic to spend time researching and understanding. So we’re going to keep it brief…
Life insurance does exactly what it says on the tin. It’s a product that insures your life. Essentially, in the worst case scenario where you are in a critical accident or become ill and die, your loved ones or chosen beneficiaries would receive a pay out.
The benefit of Life Insurance:
- It protects your loved ones: If you contribute an income to your family home (a mortgage, bills, or lifestyle costs) the financial implication of your death can be catastrophic. Life insurance ensures that all your debts are cleared, like your mortgage and credit card, as well as replacing income that would have been there if you were still alive. The kind that covers your bills and lifestyle
Relevant Life Insurance
Relevant Life Insurance does exactly the same as ‘normal’ life insurance except, that it was designed as a benefit for Contractors and ltd Company Directors. It is essentially a tax efficient way to pay for life insurance; as opposed to paying for you monthly cover through post-tax income, Relevant Life Insurance is paid for through your company expenses - saving you money.
The benefits of Relevant Life Insurance:
- It protects your loved ones: Just as with ‘normal’ life insurance, your family will be protected (which is why we want it in the first place!) but there is more...
- You save money: If you are eligible to pay for your life insurance through your business, you could save money. See just how much by watching this short film
- It’s not treated as a benefit-in-kind: Which means you don’t have to include it as a P11D benefit or pay tax on it
If you want any more detail on how to make your life insurance cover tax efficient as a Contractor or limited company Director, do get in touch.