RELEVANT LIFE POLICY
PROTECTING YOUR PEOPLE
A Relevant Life Policy is a tax-efficient way for a business to provide individual employees with death-in-service benefits. In essence, RLPs are set up under group scheme rules, but, unlike most large employer-sponsored schemes, they are 'non-registered' and consequently the benefits do not form part of an employee's lifetime pension allowance.
RLPs attract significant tax savings when compared with individual life assurance paid from salary:
Premiums are paid by the business and are an allowable deduction against Corporation Tax
There is no liability for employer or employee National Insurance on the premiums
The premiums are not considered to be a benefit in kind so the employee is not liable for income tax on them
Life benefits can be paid tax free to the employee's beneficiaries through a discretionary trust
Relevant Life Plans can be established for employees or directors to benefit their dependents via a discretionary trust. There are, therefore, several types of clients that would benefit from a Relevant Life Plan:
Highly paid employees who have accrued a large pension fund can be provided with death-in-service benefits that don't contribute to their lifetime allowance.
Small businesses may have insufficient employees to warrant a group death-in-service scheme as most schemes require at least five employees. However, Relevant Life Plans can be set up for each of the employees in a small firm.
Some employees may need more life assurance than is offered by the business’ main death-in-service scheme. A Relevant Life Plan can be set up alongside the main scheme to achieve this objective.