What is Relevant Life insurance?
A Relevant Life insurance plan, or RLP, is a life insurance policy that pays out a cash lump sum to your dependants if you die. Make sure your family are financially secure after your death
On your death, RLPs pay out up to 15x your salary and dividends – in other words, up to 15 years’ earnings in one go. There’s no income tax or inheritance tax to pay, so the amount paid out is exactly what your family will receive.
RLPs are the contractor’s equivalent of employers’ ‘death in service’ benefits. If you had that sort of benefit in a previous job, you need to replace it now you’re contracting.
Why you need Relevant Life cover
If you died, what would happen to your dependants? How would they cope?
Imagine them having to do without your earnings, year after year. What would their lives be like? An RLP is by far the best way to guarantee your family’s financial security. For just a few pounds a month, you get the reassurance of knowing they’ll always be provided for, whatever happens.
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A simple way to pay less tax
Unlike personal life policies, you can pay for your RLP through your limited company, so you get corporation tax relief on the premiums.
What’s more, HMRC does not see RLPs as benefits in kind, like company cars or private health insurance. So there’s no national insurance or income tax to pay – for you or your company.
Finally, RLPs don’t count towards the lifetime allowance for pensions, making them particularly attractive for higher earners.
Already got life insurance for your mortgage?
Your mortgage may be your biggest single household expense, but it’s not the only one.
Your household has many outgoings apart from mortgage payments. Think about food, clothes, heating, travel, home repairs and holidays.
If you died, your family would still need a great deal of financial support, even without a mortgage.
Already got personal life cover?
If you’re paying with your own money after it’s been taxed, you could make big savings by switching to paying through your limited company.
Also, if you’ve had the cover since before you started contracting, you probably need to make sure it’s still right for you.
Don’t wait. Act today.
Disaster can strike out of the blue at any time. So don’t delay. Get your cover in place now and you can stop worrying about your family’s security for good.