Who should opt for this cover?
This type of life insurance policy is especially designed for employers who have started up new businesses, with a few number of employees. This type of policy is absolutely not meant for companies that have the required number of workers to be eligible for a registered group life scheme.
Moreover, employees with high earning are especially benefited by this type of policy. This is so because the employees are allowed to keep the payouts separately from their pension or other annual allowances. Since the pension funds are high enough in themselves, it is important to keep these benefits separate from them. Since the premiums are not paid in kind, they are not subject to severe tax obligations. The employer, too, will get to enjoy certain substantial tax benefits like corporation tax relief as the monthly premiums are considered as trade expenses.
Some positive aspects about Tax Efficient life insurance -
The recent changes made to relevant life legislation have proven to be extremely beneficial for the directors of the small companies. Initially, there was no individual scheme to be offered to the individual employees, whereas one could not apply for the registered group life scheme unless there were enough employees, to be eligible for that.
Due to such restrictions, mentioned in the legislation, there were some problems in providing life insurance policies to the employees and considering these problems, certain changes were made in the legislation, following which a client will be entitled to 15 times of his annual salary.
One should remember that the policy does not include any sort of surrender value and it expires when the beneficiary reaches the age of 75. Moreover, if the local tax inspector is convinced of the fact that the premiums can be considered as trade expenses and they qualify under the exclusive rules, they will be considered for certain tax exemptions. One can use a relevant life calculator to understand the effectiveness of tax efficient life insurance.
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