Securing Future with Relevant Life Plans

in Insurance Guide

Life is quite uncertain, and securing it with a life insurance plan is very important and that is when Relevant Life Plan becomes important. A Relevant Life Plans are taken out by a company on behalf of a specific employee and the employee’s family gets a lump sum if the employee dies when employed, while the plan is in place. This relevant life insurance plan provides extra economical security to the employee’s family. It stands as a useful product for numerous organizations, which is willing to provide death-at-work benefits to the employees. Certainly, employees are the assets of every company, who needs insurance for a secured working environment. These types of policies provide joint coverage for critical illness and death of the employee. As a part of the insurance, the family of the insured gets a tax-free lump sum amount from the insurance company.

Relevant life insurance plans are cost-effective alternatives to group insurance plans. It is, ideally, taken by the organizations on behalf of their employees including directors and chairman. Certainly, the insurance companies are required to pay a consolidated amount to the insured’s family in terms of employees’ death or if they get terminal illness. This insurance comes with a wide range of employee benefits. The premium is paid by the organization to the insurance company. There are chances that relevant insurance plans may provide coverage for permanent disability too depending on insurer and terms of policy. It can be a wonderful option as drastic situations might turn things upside down.

How Relevant Life Plan Functions?

In this, the insurance company calculates a specified premium by considering the insured person’s health, age, and lifestyle. This premium is paid by the company where an insured person works and not by the individual. The lump-sum amount a relevant life insurance policy pays out is usually decided by considering the variants of an employee’s salary. As a part of the policy, if the insured person dies within the policy term; the insurance company comes forward to help with a tax-free lump-sum amount given to the beneficiaries of the insured person. Also, the beneficiary is required to be the immediate family member of the insured person and not any distant relative.

Well, the exact amount is based on the type of relevant life plans taken by the organization. Some of the plans, famous as ‘level’ policies, are intended to provide a decided amount agreed at the time of buying the insurance plan. On the other hand, the amount to be paid in other relevant life insurance is based on inflation rates.

Relevant life insurance policies are not ideated as a benefit-in-kind. So, you do not have to pay any income tax on it or not even the inheritance tax. When an organization buys such an insurance plan for employees, they can declare the premiums as a business expense for reducing their corporation tax bill.

Rules Associated with the Relevant Life Plans:

The organization is required to pay premiums regularly on a monthly or annual basis.
It needs to give correct information about the insured person and their beneficiaries at the time of buying a relevant life insurance. The information should be about the insured person’s health, age, role in the company and lifestyle.
The insured person has to inform the insurance company, in case of changes in employer or health-related issues.
It is necessary to inform the insurance company about requisite claims made within an agreed time-frame, and as specified in the terms of the plan.
The relevant life plans give a lump-sum amount till a certain age that shall not exceed 75 years.
There is no surrender value in the policy.
The insured person can get terminal illness benefits only if they are working in the company at the time of diagnosis that purchased the plan.

The Eligibility Factor for Buying Relevant Life Cover:

It is certain that the organization can apply for relevant life insurance plans on behalf of one or more employees by fulfilling under-mentioned status conditions.

Charity Organisation
Partnership Firm
Sole Trader
Limited Liability Partnership
Limited Company

The following companies or organizations are not eligible to buy relevant life insurance plans.

Equity partners in a partnership
Member of a limited liability partnership

Also Read: Benefitting from Prime Minister’s Mortgage Scheme for First Time Buyers

Benefits of Taking Relevant Life Plans:

Being an ideal option to get tax benefit, relevant life insurance plans can be noted as a business expense that lowers the company’s corporation tax bill. Moreover, the employees are eligible for tax benefits too as they do not have to pay for inheritance or income tax.
As a cost effective measure, this kind of insurance is less expensive and gives more benefits to the insured and his beneficiaries.
As a matter of affordability, it is a better option for smaller companies that cannot buy two different policies for their employees or afford group coverage plans.
With the help of relevant life plans, even the company directors can benefit by covering themselves too and get insured on company’s expenses.

Relevant life plans are an excellent way to support employees and their family in terms of crisis as they may not be prepared to deal with any kind of unforeseen situation. These plans are easily available with numerous insurance providing companies. All you have to do is check and compare the benefits before finalising the deal.

November 23, 2020