Company Director Life Insurance: A Few Interesting Points to Consider
There are many reasons behind buying a life insurance policy. Limited companies that have a considerable number of employees often go for group life insurance schemes for covering their workforce. However, what will happen if your company or small business does not qualify for group life plans? A company director life insurance policy comes in as a handy solution in these circumstances.
A company director life insurance policy is also known as relevant life insurance policy. This is a tax-efficient form of life insurance since the premiums paid for this cover are not considered as a benefit in kind so this is an advantage, which is enjoyed by both the employer and employees.
How is company director life insurance beneficial to the directors?
Company director life insurance has been particularly tailored for directors of small companies and businesses that do not warrant a group life scheme due to lack of adequate number of employees. If you are the director of a company, life insurance comes as a perquisite to you. On many occasions, it is termed as death-in-service benefit. Under this arrangement, your family members or the beneficiaries named in the policy will obtain a one-time amount if you pass away at any time during your employment with the company.
The most attractive feature for a relevant life policy is that the company directors are eligible for it without any difficulties. Even if you have not been able to get the post of a director, you can still benefit from this cover and save on your insurance premium costs.
Why does company director life insurance bring tax benefits for the employer?
Businesses are permitted to request for tax exemptions for particular expenditures that are not benefits in kind. Spending for the premium of relevant life covers for its employees is a permissible expenditure for a particular business as far as tax exemption under corporate tax rules is concerned. Obviously, you need to authenticate this with your accountant or tax consultant whether your particular business is eligible for that. Paying for the company director life insurance premiums can prove to be an effective technique to save money on tax payments. It’s a two-edged sword where businesses can cover the lives of their directors and spend a lower amount for its premium costs.
Terms and conditions of company director life insurance
There are certain terms and conditions associated with this type of cover. There is no option for surrendering the policy and the one-time payout/benefit is not receivable after the 75th birthday of the insured person. The benefits are to be distributed by a trust and the trustees have the power to decide who the beneficiaries will be. Therefore, it is always prudent that you look for the right tips and recommendations before arranging such a policy for your directors. Make sure that you just have to pay the essential amount and there is no levy of a corporation tax.
If used in the right manner, company director life insurance can reap multiple benefits for both the employer and the employee. The best possible insurance deal can be found against the best rate. High earning individuals would prefer to get life insurance cover as death benefit as a component of their remuneration package and this is one of the best methods to ensure that.