As a team of insurance advisers with a deep understanding of the UK insurance sector, we’re here to guide you through the complexities of the “Relevant Life Policy” from Legal and General. This policy is a tax-efficient life insurance scheme that’s been designed for employers to offer death-in-service benefits to their employees.

In the UK, Legal and General, the provider of the Relevant Life Policy, has paid out more than £3.5 billion in claims over the past five years across its Life, Critical Illness Cover (CIC), Terminal Illness Cover (TIC), and Income Protection (IP) policies. In 2020 alone, they paid out a record 43 personal protection claims every day, totalling more than £763 million.

These statistics highlight the significant role that such policies play in providing financial security to families in the event of a tragedy. The Relevant Life Policy is not only a crucial part of this landscape but also offers a cost-effective way for employers to provide these benefits.

In fact, premiums could be reduced by up to 49% compared to a typical life policy if the employee is a higher-rate taxpayer. For a basic rate taxpayer, this figure could be up to 40%.

So, whether you’re an employer considering this for your staff or an employee wanting to understand your benefits, this article is for you. Stay tuned as we navigate the ins and outs of the Relevant Life Policy from Legal and General, backed by our collective expertise and the latest statistics. 

Warning:

  • This information is for general guidance purposes only and should not be taken as tax advice. It is important to seek professional advice from a qualified financial adviser to ensure that you understand the tax implications of taking out a relevant life policy and to ensure that the policy is set up correctly.
  • The specific criteria that must be met for a relevant life policy to qualify as a benefit in kind are complex and are subject to change. It is important to stay up-to-date with the latest tax legislation and to seek professional advice if you are unsure whether your policy qualifies as a benefit in kind.
  • If you are an employer, it is important to ensure that you understand the tax implications of offering relevant life policy as a benefit to your employees. It is also important to ensure that you comply with all relevant employment law requirements.
  • If you are an employee, it is important to understand the tax implications of receiving a relevant life policy as a benefit from your employer. It is also important to ensure that your employer has set up the policy correctly.

What is a relevant life policy?

A relevant life policy is a life insurance policy designed specifically for small businesses to provide a tax-efficient benefit to employees. This type of policy is suitable for businesses that do not have enough employees to set up a group life insurance scheme.

It offers tax relief on premiums and payouts, making it an attractive option for employers looking to offer life insurance as a benefit.

Relevant life policies are often seen as a way for businesses to attract and retain top talent by providing an additional perk that is also tax-efficient for employees. This type of policy is regulated by the Financial Conduct Authority (FCA) and is subject to specific rules and regulations to ensure compliance. Understanding the ins and outs of relevant life policies can be complex, so it’s essential for employers to seek expert advice to ensure they are setting up the right policy for their business and employees.

Importance of life insurance policies

Life insurance policies are crucial for providing financial protection for loved ones in the event of the policyholder’s death. These policies ensure that beneficiaries are financially supported during a difficult time and can help cover funeral expenses, replace lost income, and pay off debts, ensuring their financial stability.

There are different types of life insurance policies available, each with its own benefits and drawbacks. Term life insurance provides coverage for a specific period, offering lower premiums but no cash value.

Whole life insurance, on the other hand, offers coverage for the policyholder’s entire life and accumulates cash value over time. Universal life insurance provides flexibility in premium payments and death benefits, but the cash value depends on market performance.

Life insurance can help families cope with the financial burden of a loved one’s passing, ensuring that they are not left struggling to cover expenses or debts. By understanding the different types of life insurance policies and their benefits, individuals can make informed decisions to provide financial security for their beneficiaries.

Why choose Legal & General for relevant life policies

Legal & General offers a range of relevant life policies with competitive pricing and flexible options, making it an ideal choice for individuals and businesses looking for tailored coverage. With a strong financial rating, policyholders can have confidence in the company’s stability and reliability.

Their relevant life policies are designed to meet individual needs, with the ability to cover both employees and employers. This provides the flexibility to customize coverage to specific requirements, ensuring comprehensive protection for all parties involved.

In addition, Legal & General provides a variety of additional services and resources to policyholders, including online account management for convenient access to policy information and support from dedicated advisers who can provide personalized guidance and assistance. This level of support and accessibility adds further value to the overall coverage experience.

Overall, Legal & General’s relevant life policies offer competitive pricing, flexible options, and extensive support, making it a top choice for those seeking comprehensive and tailored insurance coverage.

 

Benefits of Relevant Life Policies

A Relevant Life Policy is a type of life insurance designed for small businesses to provide death-in-service benefits for their employees. These policies offer a range of benefits for both employers and employees, including significant tax advantages, flexible coverage options, and the ability to provide a valuable employee benefit that can help attract and retain top talent.

For small businesses, Relevant Life Policies can be a cost-effective way to offer a valuable employee benefit without the expense of a group life insurance scheme. For employees, these policies provide important financial protection for their loved ones in the event of their death, as well as potential tax advantages.

Overall, Relevant Life Policies offer a range of advantages for both employers and employees, making them an attractive option for small businesses looking to provide a valuable benefit for their staff.

Peace of mind for individuals and businesses

Peace of mind is essential for both individuals and businesses as it directly influences productivity, decision-making, and overall well-being. When individuals and employees have peace of mind, they are more focused, motivated, and efficient, leading to higher productivity in their personal and professional lives.

For businesses, peace of mind is crucial for making sound decisions, managing risk, and maintaining a positive work environment. By investing in insurance policies, companies can protect their assets, employees, and operations, reducing the anxiety and stress associated with potential losses. Implementing security measures, such as cybersecurity protocols and workplace safety standards, also contributes to peace of mind by safeguarding against threats and vulnerabilities.

In the financial aspect, thorough planning and investments provide individuals and businesses with a sense of security and stability. By responsibly managing finances and preparing for the future, they can alleviate concerns about unexpected expenses, market fluctuations, and economic downturns.

Tax advantages and savings with relevant life policies

Relevant life policies offer significant tax advantages for both employers and employees. These policies allow for tax-free payouts to beneficiaries in the event of the employee’s death. Additionally, the contributions made by the employer are not subject to income tax or National Insurance, making them a tax-efficient way to provide life insurance for employees.

For employers, relevant life policies offer potential savings in terms of National Insurance contributions. They can also be more tax-efficient than traditional life insurance policies, as the premiums are not considered a taxable benefit in kind for the employee. This can result in cost savings for the employer while still providing valuable life insurance coverage for their employees.

For employees, the tax advantages of relevant life policies mean that they can benefit from life insurance coverage without having to pay income tax on the premiums or the payout received by their beneficiaries.

Overall, relevant life policies offer tax-efficient ways for employers to provide life insurance for their employees and for employees to secure valuable coverage without the burden of additional taxes.

Valid claim process and assurance from Legal & General

The valid claim process for Legal & General begins with the policyholder or their representative contacting the claims department and providing the necessary documentation, which may include the policyholder’s death certificate, medical reports, and any other relevant documents. The claims department will then guide the policyholder through the necessary steps to submit their claim, which may include completing claim forms and providing any additional information as requested.

Legal & General provides assurance to its policyholders that the claims process will be handled with care and efficiency. They strive to make the process as smooth and straightforward as possible for the policyholder during what is undoubtedly a difficult time. Legal & General is committed to promptly reviewing and processing claims, keeping the policyholder informed throughout the process, and providing support and guidance as needed.

In the unfortunate event of needing to make a claim, policyholders can trust Legal & General to provide the necessary assistance and support throughout the claims process.

Next Steps

After considering the benefits and advantages of relevant life policies from Legal & General, individuals and businesses can take several steps to move forward with obtaining this type of insurance coverage.

1. Research and Consultation: It is important to thoroughly research relevant life policies and understand how they align with specific needs and circumstances. Consulting with a financial adviser or insurance specialist can provide valuable insights and guidance in selecting the right policy.

2. Assessing Needs: Determine the amount of coverage needed and the budget available for premiums. This will help in choosing a relevant life policy that provides adequate coverage at an affordable cost.

3. Obtaining Quotes: Request quotes from Legal & General or other insurance providers to compare prices and coverage options. Consider factors such as the level of coverage, premium rates, and any additional benefits or features offered by the policy.

4. Application Process: Once a suitable, relevant life policy has been selected, individuals or businesses can proceed with the application process. This typically involves completing an application form and providing any necessary documentation or medical information.

5. Underwriting and Approval: The insurance provider will review the application and may require additional underwriting, such as medical exams or health questionnaires. Once the underwriting process is complete and the application is approved, the policyholder will receive their relevant life policy from Legal & General.

6. Policy Management: It is important for policyholders to keep their relevant life policy up to date by reviewing it regularly and notifying Legal & General of any changes in personal circumstances or beneficiaries. This ensures that the coverage remains accurate and meets the individual or business’s needs.

By following these steps, individuals and businesses can effectively navigate the process of obtaining a relevant life policy from Legal & General. This type of insurance coverage can provide valuable financial protection and peace of mind for policyholders and their loved ones.

 

 

FAQs

What exactly is a Relevant Life Policy offered by Legal & General?

A Relevant Life Policy is a type of life insurance policy specifically designed for company directors, equity partners, and employees, providing a tax-efficient life cover. Legal & General’s Relevant Life Policy pays out a cash lump sum on the death or terminal illness of the insured, offering peace of mind without the extra cost typically associated with personal life insurance due to tax relief benefits.

How cost-effective are Relevant Life Plans when obtained through Legal & General?

Relevant Life Plans from Legal & General are highly cost-effective due to the potential for corporation tax relief and the absence of National Insurance contributions on premiums. This makes it a financially savvy choice for employers seeking to provide an additional benefits package without incurring significant additional costs.

Can you outline the main advantages of choosing a Relevant Life Insurance policy with Legal & General?

The main advantages include significant tax benefits, such as life policy tax relief, the ability to write the policy into trust to avoid inheritance tax, and the provision of terminal illness cover and critical illness cover for comprehensive protection. Legal & General’s financial strength ensures reliability in paying out valid claims.

What specific coverage does the Legal & General Relevant Life Plan provide? Legal & General’s Relevant Life Plan covers the effects of death and terminal illness, offering a tax-free cash lump sum to the financial dependants of the deceased. This coverage is designed to mitigate the financial effect of an individual’s death on their family and business, including covering funeral costs.

What steps should be taken to properly set up a Relevant Life Plan with Legal & General?

Setting up a Relevant Life Plan involves consulting a financial adviser to determine the level of cover needed, completing an application with Legal & General, and potentially writing the policy into trust to ensure the benefit payable does not form part of the estate for inheritance tax purposes.

How does Legal & General calculate the lump sum amount for Relevant Life Policies?

The lump sum amount is calculated based on the level of protection desired, taking into account the insured’s salary, dividends, and the overall financial effect their loss would have on the business. Factors such as age at entry, health status, and life expectancy are also considered.

Who qualifies for coverage under a Legal & General Relevant Life Plan? Company directors, equity partners, salaried partners, and key employees can qualify for coverage, provided there is an insurable interest and a professional relationship between the policyholder and the insured.

Are there any specific exclusions for eligibility under Legal & General’s Relevant Life Plans?

Individuals without a direct employee relationship, such as freelancers or contractors without a limited company, may not be eligible. The policy also has age at entry and maximum term limits to consider.

Can businesses claim tax deductions for premiums paid on a Relevant Life Policy with Legal & General?

Yes, businesses can typically claim tax deductions on premiums paid for a Relevant Life Policy as a business expense, potentially reducing their corporation tax liability.

Does Legal & General classify Relevant Life Insurance as a benefit in kind for tax purposes?

No, Relevant Life Insurance is not considered a benefit in kind, so employees do not pay income tax or National Insurance on the premiums, and employers can claim tax relief on the cost.

What distinguishes Business Life Insurance from a Relevant Life Policy at Legal & General?

Business Life Insurance, such as key person insurance, is intended to protect the company against the financial loss from the death of a key employee. In contrast, a Relevant Life Policy is designed as an employee benefit, providing life cover to the individual employee or director.

How should businesses decide on the right type of life insurance through Legal & General?

Deciding on the right type of life insurance requires assessing the business’s needs, the financial impact of losing a key employee, and the desired benefits for employees. Consulting with a financial adviser can help businesses navigate a wide range of options, including Relevant Life Policies, key person insurance, and traditional life insurance, to find the best fit.