Many large businesses in the UK provide all of their employees with a benefits package that includes a life insurance cover. However, if you’re self-employed or a business owner yourself, you may not have this kind of protection in place. In this blog, we’ll be answering the question on many self-employed people’s lips; ‘Can I claim life insurance as a business expense UK-wide?’.
What Is Life Insurance?
Life insurance is a type of insurance policy that provides your loved ones and family members with financial support in the event of your death. Relevant life insurance is a great option if you’re looking to protect your family from the financial implications of your passing and give them peace of mind that they are covered if they fall into financial hardship.
Most life insurance policies will pay your loved ones an agreed-upon cash sum if you die during the period covered by your policy. This cash can be used to help your family with any everyday expenses, such as mortgage payments, childcare costs and household bills.
With a relevant life insurance policy, you have the freedom to choose the amount of coverage you need for a period of your choosing, as well as whether you want to opt for a single or joint insurance policy.
Do I Need Life Insurance?
In order to determine if you need relevant life insurance, all you need to do is ask yourself if your death would have a financial impact on your dependents and if they would be financially stable after your passing. If the answer is ‘yes’, then taking out a life insurance policy could provide you with the peace of mind that your loved ones will be protected after you pass away. It’s also a good idea to take out life insurance if you have a partner that relies on your income to make sure that they won’t be left struggling financially.
The cost of your life insurance will vary depending on the following factors:
– Your health
– Your age
– Your lifestyle
– Your occupation
– Your family medical history
Can I Claim Life Insurance As A Business Expense?
If you’re a director of a limited company or a self-employed person, you’ll be able to claim some forms of life insurance with HMRC as a tax-deductible business expense. If you are a company director and choose to pay for life insurance through your business rather than with your own income, you could save thousands of pounds throughout the duration of your business life insurance policy. Employees in large businesses also have the ability to claim life insurance via the company they work for if this is part of their benefits package.
In order to claim life insurance as a business expense, UK business owners will need to set up a relevant life policy, which is a type of death-in-service benefit that is organised and paid for by the business on behalf of the director. This policy will pay an employee’s beneficiaries in the event of their death, so you can claim back corporation tax relief without having to pay Employer National Insurance, income tax or Employee National Insurance.
To make sure that your policy is as tax efficient as possible while avoiding future tax implications, it’s a good idea to speak to an experienced financial advisor from a reputable firm so that they can provide you with expert guidance.
Contact The Experts
At WIS Business Protection, we offer specialist support and advisory services to help businesses and individuals in the UK find the best insurance deals to suit their unique requirements. If you would like to find the best business life insurance or business protection insurance policy for you, don’t hesitate to give our team a call on 0203 011 1968 or fill in our online contact form here to learn more about our services.