Relevant Life Policy: A New Orientation in life insurance cover

June 25, 2013

Insurance

Every business owners or the directors of the companies plan to offer life insurance coverage to all of their employees. But providing life insurance or death in service benefits individually may seem to be  a little hectic as well as extremely expensive. In a situation like this, a relevant life policy, which is a special type of life insurance policy, exclusively designed for employers who want to provide a death in service benefit to their employers. Though this type of insurance cover is comparatively newer in the market, it has turned out to be an extremely popular among the directors, mainly due to the huge tax benefits that it provides. So, if you are not quite thorough with the special features of this type of policy, here are they mentioned –

Essential Facts you should know about this policy –

  • According to this policy a certain amount of money is payable to the family members on the death of an employee.

  • This is a term insurance single life policy, offered by an employer  and the premiums are paid by the employer.

  • One can increase the end term of the policy using the continuation option. This is an opportunity using which the employees can opt for a life policy for the exact amount of money for the remainder of his life.

  • If an employee retires or changes the job, he no longer gets to enjoy the benefits.

  • This policy doesn’t include any other benefits in the package and does not provide any surrender value. Only benefits, that are mentioned beforehand, are paid under this policy.

  • The client no longer gets to enjoy the benefits after reaching the age of 75.

  • The employers who offer these benefits, must be subject to a special type of relevant life policy trust.

  • It is not allowed to apply for this policy only in order to avoid tax payments.

  • Unlike other types of life insurance policies, relevant life cover allows to include a disablement benefit or terminal illness benefit, during the service period of an employee.

  • This policy is exclusively designed to match the criteria of a single life cover.

  • The benefits should be provided to a family member who will assure that the sum is transferred to the right person.

Well, having mentioned the salient features of relevant life insurance policy, now let’s take a look at the substantial tax benefits, that it offers –

  • Earlier, when a director of a company or some shareholder wanted to purchase any such policies they had to pay the premiums either from the company’s account or from their post tax earnings. Moreover, the premiums were subject to crucial tax obligations. On the contrary, the premiums of relevant life cover are paid by the employer  and that too in a tax saving approach.

  • Since the premiums of this type of policy are not paid as benefits in kind, they are tax free.

  • As the premiums of this policies are considered as trade expenses, the employers, too, enjoy  some corporation tax relief.

Relevant Life Policy: A New Orientation in life insurance cover

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Life Insurance