If you are the director of a small start up and have very few number of employees, opting for a relevant life cover would be the perfect choice. Quite naturally, like every other employer, you would also like to offer life insurance coverages to your workers and for doing that, you must be considering buying personal life insurance policies for each of them. But when it comes to calculating the tax benefits, a relevant life policy can be of much help to you.
Opting for individual death-in-service benefit for your employers would be a bit hectic as well as expensive. In a situation like this, relevant life policies, which are exclusively designed for those employers who are interested to offer life coverage to their employees, seem to be a lifesaver. In spite of being relatively newer in the insurance market, this policy has become extremely famous among the employers of the start ups and this is so, mainly due to the substantial tax benefits that it offers.
What is the exclusive factor of relevant life insurance?
This is a special type of life insurance policy that can be opted for by the directors of small businesses, for their employees. It offers a lump sum amount of money on the death of the workers. Especially, companies that have a few employees and are not eligible to apply for registered group life scheme. Moreover, this policy also seems to be a beneficiary deal for those employers who are paying for their own life policies. This is so because with a relevant life cover, the premiums are paid from the company’s account, and not from the earnings of the employer.
Features of Relevant life cover that you should know:
If the schemes of this policy sound interesting to you, and if you are planning to get one, you should be well aware about the features of this policy before you take a final decision –
• Only the benefits and the sums that are prescribed beforehand in the policy, can be delivered,and no other benefits can be included in the cover. • According to the conditions of the policy, the benefits must be paid in a single, lump sum amount, after the client celebrates his 75th birthday. • No sort of surrender value can be imposed upon this policy. • One should not apply for this type of life insurance only in order to avoid the tax payments. • The benefits must be conferred on a trustee member who will definitely ensure that the sums are delivered to the concerned people, within the given time frame. • Though this varies with the different institutions, usually disablement benefits or terminal illness benefits can be added in this policy, during the service period of the employee.
• All the benefits must be paid through a discretionary trust after the employee’s death.
Well, if you are not too sure about the tax benefits of relevant life policies you can compare the features of this policies and the traditional one, using a relevant life calculator.