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Relevant life policies

Relevant life policies. Sales opportunity. Relevant life policies – qualifying rules. Income Tax (Earnings and Pensions) Act 2003. Life cover only Single life assured Benefits to an individual or a charity Placed in relevant life policy trust from outset No surrender value

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Relevant life policies

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  1. Relevant life policies Sales opportunity

  2. Relevant life policies – qualifying rules Income Tax (Earnings and Pensions) Act 2003 • Life cover only • Single life assured • Benefits to an individual or a charity • Placed in relevant life policy trust from outset • No surrender value • Policy must end before age 75 • Main purpose of the policy must not be tax avoidance

  3. Employee benefits • Pensions • auto enrolment • Protection benefits • group life/death in service • group critical illness • group income protection • Health care benefits • group private medical insurance • health cash plans • employee assistance programme • Flexible benefits / salary sacrifice • cycle to work • employee discounts • childcare vouchers • technology

  4. Why a relevant life policy instead of group life?

  5. Relevant life policies A tax-efficient way of arranging life cover for employees Employer • Premiums paid by employer are a deductible business expense • Premiums not assessable for National Insurance Contributions Employee • Premiums paid by employer are not a benefit in kind and so no income tax for employee • Benefits paid free of income tax • Benefit is free of inheritance tax (not part of employee’s estate due to a trust) • Does not form part of the employee’s annual or lifetime pension allowance

  6. Relevant life policies in practice

  7. Online tools

  8. What are the barriers? Business owners • Lack of awareness • Lack of concern • Cost Advisers • Lack of awareness • Low priority • Out of practice • Complexity and time • Low collaboration Product • Price • Indexation • Continuation • Online portal restrictions

  9. Qualification for a relevant life policy Eligible for a relevant life policy • An employee of a: • Sole trader • Partnership • LLP • Limited company • A shareholding director of a limited company Not eligible for a relevant life policy • A sole trader • An equity partner • An LLP member • A contractor

  10. Opportunities • How many SMEs do you see that are not eligible for group life? • Which of your clients: • would like to reward their top employees? • would like to be able to offer a benefit to retain their top people? • would like to make their recruitment package more attractive? • How would you market relevant life policies?

  11. Thank you

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