1 PUT LIFE COVER ON EXPENSES. Our Relevant Life Plan is a cost efficient way of offering life cover to you or your employees. It s tax efficient and, in most cases, premiums can be treated as an allowable business expense by HMRC. With Corporation tax relief available, no additional income tax or NI to pay, it s good business for both you and your employees.
2 1 ADDED PEACE OF MIND TAX FREE. Our Relevant Life Plan offers some very special advantages to directors and employees of small businesses, most notably tax efficiency. While the cover is personal to you and your employees, the policy may count as a business expense so it s tax deductible and does not count towards annual or lifetime pension allowances. It s also a cost-effective way to offer life cover to your employees if your business is not eligible for a group life scheme. WHAT IS THE? An individual Death in Service life assurance policy available for employees of the company which may include directors. Your business pays regular premiums based on the level of cover. If the person covered dies or is diagnosed with a terminal illness whilst in employment during the term, the plan pays a fixed, one-off lump sum. The plan is designed to meet certain legislative requirements that mean your premiums, benefits and options should be treated tax efficiently. WHO CAN TAKE OUT A? To be eligible for a Relevant Life Plan, the person covered must be an employee of a UK business, which can include company directors who are salaried. Unfortunately, Relevant Life Plans are not available for sole traders, equity partners of a partnership or equity members of a Limited Liability Partnership. The rest of this guide assumes that the person covered is an employee of the business.
3 2 HOW IT WORKS Company takes out a Relevant Life Plan Which insures the employee s life The Relevant Life Plan is put in trust to a person/s or charity of the employees choice. If the employee dies during the term or is diagnosed with a terminal illness (except in the last 12 months of the plan) a claim is made by the trustee/s. The plan pays out to the trustee/s. IF YOU OR AN EMPLOYEE LEAVES THE COMPANY There are two options which must be exercised within 90 days of leaving: The new employer can apply to continue the policy, with Terminal Illness Cover, without the need for further medical evidence or underwriting. The former employee can continue with the policy without Terminal Illness Cover or the need for further medical evidence or underwriting. Terms and conditions apply.
4 3 AMOUNT OF COVER The Maximum amount of cover available usually depends on the employee s age and remuneration (as decided by you, the employer) and is reduced if the employee already has any family protection cover in place. Age 17 to 29: up to 25x remuneration package Age 30 to 39: up to 25x remuneration package Age 40 to 49: up to 25x remuneration package Age 50 to 59 up to 20x remuneration package Age 60 to 73 up to 15x remuneration package WHAT MAKES THIS PLAN SO GOOD FOR COMPANY DIRECTORS? You can effectively make a saving on life cover compared with paying for it personally. Premiums are normally classed as a business expense and so are likely to be an allowable deduction for Corporation Tax purposes. Keeping the plan in trust offers the potential to plan for Inheritance Tax if your estate is or is likely to be worth more than the current Inheritance Tax threshold. Offers a cost-effective way to provide Death In Service benefits to your employees. Our key documentation has been reviewed by William Massey QC, a top senior English barrister.
5 4 ADDITIONAL BENEFITS The plan automatically includes some additional benefits, at no extra cost. While the application is being underwritten, the employee will be covered with Accidental Death Benefit. Please refer to our Key Features Document for more information. The employer can increase the level of cover without the need for further underwriting. This is known as the Guaranteed Insurability Option and is available if the employee: Receives an increase in remuneration. Increases their mortgage to move or to make major home improvements. Gets married or enters into a registered civil partnership. Becomes a parent. As the employer, you ll have to pay the extra premiums. Terms and conditions apply. WHY LEGAL & GENERAL? The Legal & General Group, established in 1836, is one of the UK s leading financial services companies. As at 30 June 2014, we were responsible for investing 467 billion worldwide on behalf of investors, policyholders and shareholders. We also had over 7.9 million customers in the UK for our life assurance, pensions, investments and general insurance plans. WHY CHOOSE US? In 2014 we won the Moneyfacts Best Business Protection provider award as voted for by financial advisers. We offer a Priority Protection service for high sum assured business, which includes immediate cover, medicals by the Harley Street Doctors Group, and a faster application process.
6 5 WHAT CAN YOU SAVE? The unique way in which Relevant Life Plans work mean you can effectively have the taxman help pay for your personal life cover. EXAMPLE SAVING: BUSINESS DIRECTOR Andrew Millar is managing director of a furniture design business in Lancashire. He already has a life policy but with he and his wife about to have their third child, he wants to increase his cover to help make sure his family would be financially secure if he died. His existing plan doesn t allow him to increase his cover, so he decides to take out further cover by starting a new life policy. Comparing the two plans that his financial adviser recommends, he doesn t hesitate to choose the Relevant Life Plan. Below you can see the sums that made his decision easy. The Relevant Life Plan is particularly beneficial for Andrew because he s employed as a salaried director and is also a shareholder of the business, so all the savings go to him. If he were to pay for his life cover personally it would cost 1, every year. By the company using a Relevant Life Plan to provide cover, it only costs 800 each year. That s less, which is a saving of almost 50%. The example assumes that Andrew s Relevant Life Plan gets full tax relief and qualifies as a allowable business expense. NON-RELEVANT LIFE PLAN POLICY Annual Premium 1,000 1,000 Employee National Insurance None Contribution (assuming 2%) Income Tax (assuming 40%) None Gross earnings needed 1, ,000 Employer National Insurance None Contribution (assuming 13.8%) Total gross cost 1, ,000 Less Corporation Tax (assuming 20%) Tax-adjusted total cost 1, This example is fictitious and provided for illustration purposes only. Actual premiums will depend on individual circumstances. As with all insurance policies, there are exclusions and limitations. Your financial adviser will be able to discuss these with you.
7 6 GOOD NEWS AT A BAD TIME. It s reassuring to know that, if the unthinkable ever happened to the employee, the decision to take out a Relevant Life Plan could help secure their family s financial future. EXAMPLE PAY OUT: MANAGING DIRECTOR Andrew Millar is employed as a managing director of an automotive manufacturing business in Coventry.Andrew leads a healthy lifestyle and takes plenty of exercise, but he worries that someday he may not be around to support his wife, Ellen. The company takes out a Relevant Life Plan, setting his cover at 1 million. Andrew nominates Ellen as a beneficiary. If the worst did happen and Andrew died during the term, the Relevant Life Plan trustees would receive 1 million. This could then be paid, tax free to Ellen, giving her enough money to pay off the mortgage on the family home and hopefully live comfortably for years to come. The chart below explains how it would work, assuming that Andrew s Relevant Life Plan gets full tax relief and qualifies as an allowable business expense. Cover: 1 million The business pays XXX a month for 20 years Andrew dies during the term The trustees make a successful claim The trustees pay Ellen THE IMPORTANCE OF TRUSTS Writing a policy in trust is one way of helping make sure the benefits of the policy are paid out to those who you want it to go to and without unnecessary delays. Trusts can provide the following benefits: Beneficiaries may receive the money at the right time tax efficiently. Probate is avoided. Intestacy law avoided. IHT liability may be avoided/reduced.
8 7 IN A SMALL BUSINESS. A Relevant Life Plan can be the ideal way to provide life cover benefits to your employees in a practical and cost effective way. GROUP EXAMPLE: A SMALL BUSINESS OF LESS THAN FIVE PEOPLE Sebastian Greene is owner-operator of a tree surgery business based in Bristol. Sebastian works full-time and employs two others Amy, another experienced tree surgeon, and David, a trainee. It s a job that carries risks, even for qualified professionals, so Sebastian would like to provide life assurance to cover himself and his employees. Sebastian cannot access a full group life scheme because his company is too small but his financial adviser suggests he takes a look at our Relevant Life Plan, which could offer an affordable alternative. The chart below explains how the costs work, assuming the Relevant Life Plans get full tax relief and qualify as an allowable business expense.
9 8 SEBASTIAN AMY DAVID Premium 100 a month 70 a month 30 a month Employee National None None None Insurance Contribution Income Tax None None None Total company 100 a month 70 a month 30 a month gross cost Employer National None None None Insurance Contribution Less Corporation Tax (assuming 20%) Tax-adjusted cost This example is fictitious and provided for illustration purposes only.
10 9 COVER WHERE IT S DUE. Death In Service benefits (from registered group schemes) can mean the estates of people with large pension funds incur extra tax. That s not true of a Relevant Life Plan because, under the current rules, its premiums and benefits don t count towards the annual or lifetime pension allowances. PENSION EXAMPLE: THE LIFETIME ALLOWANCE Andrea Davidson is 45 and lead architect for a civil engineering practice in London. She earns 100,000 a year. Andrea s dream is to design and build her own home when she retires. After making considerable contributions to her pension, she s amassed a retirement fund of 500,000. Enough, with the sale of her current home, to build her own house and live comfortably in retirement. As of this year, Andrea s employer has decided they would like to offer all key employees a Death In Service benefit of 10 x salary, with the aim of keeping the longest serving and most talented people at the company. If her employer decided to use a group life plan, which is a registered pension scheme, Andrea and her family could actually lose out because any claim would put her pension funds over the lifetime allowance, with the excess taxed at 55%. Fortunately, the company director does his homework and, with the help of a financial adviser, opts instead for our Relevant Life Plan. This means if Andrea dies before she retires and before the policy expires, her family could receive all the money they were due, leaving them potentially more than 130,000 better off.
11 10 DEATH IN SERVICE Size of Andrea s pension fund Lifetime allowance tax year 2014/2015 Life Cover 500, million 1 million 500, million 1 million Pension funds on death Excess above the lifetime allowance 1,500, , ,000 None Tax payable on 55% 137,500 None This example is fictitious and provided for illustration purposes only. FIND OUT MORE To find out more, please contact your financial adviser who can give you a copy of the Key Features Document and Policy Terms and Conditions, which explains the benefits and limitations of the Relevant Life Plan in more detail.
12 Legal & General Assurance Society Limited Registered in England and Wales No Registered office: One Coleman Street, London EC2R 5AA We are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. W /14
INSURANCE KEY FEATURES OF THE: Relevant Life Plan This is an important document which you should keep in a safe place. This is a guide to our Relevant Life Plan and is based on our understanding of current
PENSION ANNUITies BUYING A PENSION ANNUITY BUYING A PENSION ANNUITY. 1 This is an important, once and for all, decision. We want you to be confident that you have the information you need to make the right
Key Features of the NFU Mutual Pension Annuity Contents Who should buy this product? page 1 Its Aim page 1 Your Commitment page 1 Risks page 1 How do pensions work? page 2 What is a Pension Annuity? page
Buying a pension annuity Why do I need to think about buying a pension annuity? When you come to retire, you will have some important decisions to make. Probably most important of all is how you will generate
Helping you decide The Financial Conduct Authority is a financial services regulator. It requires us to give you this important information to help you to decide whether our Pension Annuity is right for
Conventional Lifetime Annuity Options Your Questions Answered 0800 014 7470 0333 014 6267 am-5.30pm weekdays. Calls may be recorded for training and monitoring purposes. www.425fs.co.uk Contents 1. Introduction
In safe hands Business protection for sole traders How secure is your financial future? As a sole trader the success of your business depends on you your skills, your judgement, your drive. In turn you
Key Features of the Reliance Mutual Enhanced Annuity for.smokers. The Financial Conduct Authority is a financial services regulator. It requires us, Reliance Mutual Insurance Society Limited, to give you
It s flexible Key features of the Flexible Income Annuity Flexible Income Annuity This is an important document and you should read it before deciding whether to buy your pension annuity from us Purpose
UPDATED: 6 April 2015 NEW pension freedoms Your options at retirement How to take tax-free lump sums and income, under new pension freedoms One College Square South, Anchor Road, Bristol, BS1 5HL www.hl.co.uk
YOUR RETIREMENT OPTIONS A guide from Irish Life Committed to Plain English There is no financial jargon in this booklet and everything you need to know is written in an upfront and honest way. We are delighted
Key Features of the Just Retirement Fixed Term Annuity This brochure outlines the key features of the Just Retirement Fixed Term Annuity. The Financial Conduct Authority is a financial services regulator.
KEY GUIDE Financial protection for you and your family Protecting what matters most Life and health insurance protection underpins most good financial planning. These types of insurance can ensure that
Key features of the Income Protection Plan Helping you decide This is an important document which gives you a summary of the Income Protection Plan. Please read this with your illustration, if you have
INCOME PROTECTION THE BASICS WHAT IF? If you couldn t work due to illness or injury, could you cope financially? We all hope we ll never find out, but the reality is nearly a third of us will have close
NEW PENSION FREEDOMS HAVE ARRIVED Guide to Drawdown A flexible way to access your pension: this guide explains the benefits and risks of drawdown What s inside: How drawdown works The advantages and disadvantages
Pension Annuity Key Features This brochure outlines the key features of the Just Retirement Pension Annuity. The Financial Conduct Authority is a financial services regulator. It requires us, Just Retirement,
Key Features of our Guaranteed Pension Annuity The Financial Conduct Authority is a financial services regulator. It requires us, Hodge Lifetime, to give you this important information to help you decide
Important information Key Features of the Guaranteed Pension Annuity Important information The Financial Conduct Authority is a financial services regulator. Prudential is required to give you the important
& Guidance A Guide to Life Insurance Cover Contents How can I protect my family financially if I die? 02 What is life insurance? 03 What is a Financial Broker? 06 Why would I need to use a Financial Broker?
Key Features of the With Profits Pension Annuity Key Features of the With Profits Pension Annuity The Financial Conduct Authority is a financial services regulator. It requires us, Aviva, to give you this
Shedding light on Life insurance a practical guide to helping you achieve a lifetime of financial security Learn more about: Safeguarding your loved ones Protecting your future Ensuring your dreams live
Our guide to buying an annuity 2 Our guide to buying an annuity Contents Introduction 3 Pension reforms Thinking about retirement 3 Money and budgeting How can we help? Your retirement timeline Key questions
00000 Old Mutual Wealth Life Assurance Limited is a provider of long-term life assurance. It is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential
PLEASE READ CAREFULLY BEFORE APPLYING FOR YOUR ANNUITY Phone: 0117 980 9940 Visit: www.hl.co.uk IMPORTANT INFORMATION ABOUT ANNUITIES PLEASE READ CAREFULLY BEFORE APPLYING FOR YOUR ANNUITY This guide explains
i2live i2live Annuity Key features This is an important document. Please read it alongside your personal illustration and the Customer Fund Guide and keep it safe for future reference. About this document