Relevant life cover can be an extremely beneficial policy to be implemented by employers for their employees. We plan to guide you through what relevant life cover is and why it is different to personal life insurance, as well as detailing the advantageous benefits for both an employer and an employee who work within this scheme. We also answer, is relevant life cover a benefit in kind?
What is relevant life cover?
Relevant life cover, also referred to as relevant life insurance, is a policy for employees that has been paid for by the employer that is available within any work environment and/or business relationship between an employer and employee. It can be taken out by employers to provide life insurance for an individual employee as an alternative way to provide benefits to employees outside of a traditional registered life insurance scheme. Also, it pays out a lump sum of money to an employee, or to their family, if an employee is diagnosed with a terminal illness or if they pass away.
Key employees, or those who earn high wages within the company, are the most eligible employees to be considered. They will benefit the most from choosing this insurance policy over other traditional life insurance schemes within the workplace. You can find out more about when relevant life insurance is perhaps not the most appropriate choice in the following guide on our website.
What is the difference between relevant life cover and personal life insurance?
Unlike personal life insurance, relevant life cover can provide significant savings on premiums that can benefit both the employer and the employee. Relevant life cover recognises the potential negative impacts on the business itself if a key employee is taken ill or has sadly passed away. This is why it can ensure that your business continues to function smoothly in the event of employee loss.
What are the benefits of relevant life cover?
There are many benefits of choosing this policy for your business, both for an employer and their employee. We have outlined some of the central benefits of a relevant life plan as a company’s life insurance scheme.
Benefits for an employer
• Protects the business
Relevant life cover helps to protect the business and maintain its functioning in the event of losing a vital key employee.
Compared to ordinary life insurance plans or traditional company insurance schemes, you are able to save up to 50% tax by choosing this plan for your valuable employees.
Benefits for the employee
• Lots of benefits
Through relevant life cover, employees have access to a range of employee-specific benefits. For example, this is a tax-efficient scheme for both the employer and the employee, which is what enables them access to many benefits that they may have been previously excluded from.
If an employee chooses to leave the company or business, they have the option to easily change plans while still remaining protected under the scheme.
Is relevant life cover a benefit in kind?
A benefit-in-kind is a cashless benefit of monetary value that is provided by an employer to their employees within a company or larger workspace environment. As relevant life cover is tax-deductible, meaning that it is a cost that can be claimed as an allowable expense. Because of this, the answer to ‘is relevant life cover a benefit in kind?’ is that HMRC does not consider it as a P11D benefit-in-kind. Examples of HMRC considered benefits-in-kind are non-business travel expenses, company vehicles and non-business entertainment expenses.
For more information, you can contact our team at WIS Business Protection. We can provide expert advice and guidance to make sure you make the best decision for yourself, your company and your employees.