Relevant Life

Relevant Life
Plans

Directors & Relevant Life Plans

McCarthy Hill Family Office can provide specialists advice on Directors Life Cover – Relevant Life Plans. Relevant Life Plans provide employees including directors with life cover, Because this insurance is paid for by the business, Relevant Life Cover premiums are fully tax deductible as a business expense. National Insurance also doesn't apply when the policy is within your company.

The life cover is also a non-taxable benefit for employees and is usually paid without any inheritance tax. It also doesn’t form part of their annual or lifetime allowance for pension benefits.

Examples

Steve is the Managing Director of a Building Company and wants to ensure that his family are fully protected in the event of his death, he has a number of different life assurance plans which he is paying personally for a cost of £60 per month.

The Illustration below shows the difference in the gross cost of an employer (his limited company) providing the life cover for him via a Relevant Life Insurance policy compared to personal plans.

An initial illustration for a £1,000,000 of cover over a term of 20 years is a premium of £60 per month (he is 40 years old).

Cost to Employee

Personal Life Insurance Relevant Life Insurance
Monthly Premium £60.00 n/a
Employee National Insurance Contribution (2%) £2.06 n/a
Employee Income Tax (40%) £41.38 n/a
Total cost to employee £103.44 n/a
Monthly premium n/a £60.00
Employer National Insurance contribution (13.8%) £14.28 n/a
Total gross cost £117.72 £60.00
Less Corporation Tax relief (19%) £22.37 £11.40
Tax adjusted total cost £95.35 £48.60
With the Relevant Life Insurance the total savings is £46.75 (49%) per month, which is £561 per annum.

Relevant Life Plan with Significant Illness cover

All relevant life insurance plans protect employees against death and terminal illnesses. 

However, it is possible to extend the coverage to significant injury. As the name suggests, it is an extension that promises to 
offer payouts when employees are struck down by substantial injuries. 

These are usually the type of injuries that render the individual unable to work.
Providers have set guidelines on which conditions fall under the category of significant injury.

The 28 criteria points are as follows:

  • Advanced cancer – of specified anaemia – with bone marrow failure
  • Bacterial meningitis – resulting in permanent symptoms
  • Benign brain tumour – resulting in permanent symptoms
  • Benign spinal cord tumour – resulting in permanent symptoms
  • Brain injury due to anoxia or hypoxia – resulting in permanent symptoms
  • Creutzfeldt-Jakob disease
  • Dementia – resulting in permanent symptoms
  • Encephalitis – resulting in permanent symptoms
  • Intensive care – resulting in permanent symptoms
  • Kidney failure – requiring permanent dialysis
  • Liver failure
  • Major organ transplant – from another donor where applicable
  • Motor neurone disease – resulting in permanent symptoms

    

  • Multiple sclerosis – with persisting symptoms
  • Neuromyelitis optica – with persisting symptoms
  • Parkinson’s disease – resulting in permanent symptoms
  • Parkinson’s plus syndromes – resulting in permanent symptoms
  • Pneumonectomy
  • Psychosis and bipolar affective disorder – of specified severity
  • Pulmonary arterial hypertension – of specified cause and severity
  • Respiratory failure – of specified severity
  • Severe heart condition – of specified severity
  • Spinal stroke – resulting in permanent symptoms
  • Stroke – resulting in permanent symptoms
  • Systemic lupus erythematosus – of specified severity
  • Third-degree burns – of specified severity
  • Traumatic brain injury – resulting in permanent symptoms
It is additionally possible to add a permanent disability coverage plan, which essentially offers a payout when an individual becomes unable to work or complete three (or more) of their work tasks due to any injury.

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