Life insurance is a crucial way to protect your family in the future. Should the worst happen, you will need to know that your family will be provided for, and there will be no difficulties in paying bills like the mortgage or schooling fees. As a business director, you may find relevant life insurance more beneficial than a personal life insurance policy.
This article will explore the benefits of relevant life insurance and why company directors should consider taking it out.
What Is Relevant Life Insurance?
Relevant life insurance works in a similar way to personal life insurance. It provides a pay-out of up to 15 times your yearly income, delivered to your family in the event of your death. The key difference between relevant life insurance and personal life insurance is that relevant life insurance is taken out and paid for through your company.
This means that you can make significant savings on tax, as the insurance premiums are paid for from your income before tax. The pay-out to your loved ones is also tax-free.
Are You Eligible?
Any employee or director of a business based in the UK is eligible for relevant life insurance. You will need to talk to your employer and ask them to set up relevant life insurance on your behalf. You can discuss any additional coverage you need, such as funeral provisions or medical insurance, with your provider or financial planner.
Bolster Your Pension Fund
One of the significant advantages of relevant life insurance is that it does not contribute to your lifetime pension allowance. This can be beneficial for high earners who are likely to go over their allowance. Going over your pension allowance can result in a hefty tax bill, so putting some of your pension funding into cover like relevant life insurance can be beneficial.
Transfer Your Policy Easily
Another of the advantages of relevant life insurance is the ability to move it easily between roles. The policy’s portability can make it an attractive benefit. Just like you take your pension pot with you when you switch positions, you can take your policy with you when you move onto new pastures.
Find A Quote
It is important to find a good quote for relevant life insurance. You should discuss your needs with a professional financial advisor to ensure you get the best cover possible. There are a broad range of options out there, and you will need to find the cover that suits you, your family and circumstances best. For the best advice, you can talk to the Pension, Investment & Insurance Experts at Drewberry.
Understand Your Needs
When talking to a financial advisor, it is crucial that you understand your needs and your family’s. Consider the age of your children, how much debt you have, the state of your mortgage and more. If you have young children, then a larger policy may be beneficial to ensure that they will be properly supported into adulthood.
It may help to discuss your needs with your family before you take out cover. Talk to your spouse or partner and find out their thoughts on what your family will need when you’re gone. It may help to go to a financial planner together to make the right choice for your insurance as a team.
Consider The Cost
There are various factors that can impact the cost of your policy. These often include your age, health, lifestyle, and family history. The younger and healthier you are, the more likely you are to receive lower premiums. The cost can also come down to the level of coverage you want and the length of cover.
Ideally, you should take out this type of cover at an early age. It is also best to cut out any bad habits such as smoking or regularly drinking more than the recommended daily and weekly alcohol intake. Keeping yourself as healthy as possible can be the most effective way to get the best deal on your policy.
Enjoy Peace Of Mind
For many, the primary benefit of relevant life insurance is the peace of mind it provides. We all spend time worrying about how our loved ones will cope after we’re gone. Major life events like marriage, buying a property or welcoming a new baby into the family can increase the urgency of ensuring there are provisions in place for when you’re gone. Relevant life insurance can be the perfect way to put your mind at ease and reduce any financial burden caused by your death.
Relevant life insurance is an invaluable investment for small business directors. Not only can it help keep your family financially secure after you’re gone, but it can also give you the peace of mind that your family will be cared for. It is a good idea to get in touch with a financial planning expert to help you make the best possible choices about your future and find the right policy for you and your family.
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