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Introducing Relevant Life Policies

Introducing Relevant Life Policies. Pitchbook. For advisers. What is a Relevant Life Policy?. Defined in Income Tax (Earnings & Pensions) Act 2003. Life cover only Employer sponsored Single life assured No surrender value Policy ends before age 75

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Introducing Relevant Life Policies

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  1. Introducing Relevant Life Policies Pitchbook For advisers

  2. What is a Relevant Life Policy? Defined in Income Tax (Earnings & Pensions) Act 2003 • Life cover only • Employer sponsored • Single life assured • No surrender value • Policy ends before age 75 • Benefits in trust created at outset (for an individual or a charity) • Not part of employees annual pension or lifetime allowance • Main purpose of the policy must not be tax avoidance

  3. The opportunity • A great employee benefits package for SMEs with low buying power to provide employee benefits • SMEs that are too small for ‘death in service’ benefits • Company directors looking to save on tax • Flexible cover - reward specified employees or provide variable cover • High earners – Relevant Life Policies do not count towards Lifetime Allowance Which of your corporate clients: • Would like to reward their top employees? • Would like to be able to offer a benefit to retain their top people? • Would like to make their recruitment package more attractive? 4.85 million SMEs in the UK

  4. Who else can benefit? A Relevant Life Policy is suitable in many situations, not just SMEs looking for life cover or an employee benefits package Company directors • Directors of limited companies can enjoy valuable tax benefits if the premiums for life insurance are paid by one company instead of from personal income after tax. Flexible cover • A Relevant Life Policy can provide individually calculated cover levels so are suitable where companies only want to reward several employees or provide variable cover. High earners • The benefits of Relevant Life Polices do not count towards the current Lifetime Allowance of £1.25 million, above which tax is currently charged at 55% tax (on death).

  5. Big business benefits for small businesses • Relevant Life Policies from PruProtect come with Vitality, our healthy living rewards programme. Allowing you the chance to offer your clients a benefits package for their employees. • Not only does that help with recruitment and retention but healthy employees are: • more engaged • take less time off • more productive • On top of all that, if your clients take out Vitality Plus or Vitality Optimiser, they can also get cashback (based on how much their employees engage with Vitality).

  6. RLP with Vitality Plus or Optimiser – client benefits • Tax efficient – a tax deductible business expense and no National Insurance contributions • A great employee benefit for small businesses, life cover and a healthy living rewards programme that can help attract and retain the best people • More affordable cover – An upfront discount on the protection premium of between 5 – 20% for fixed term cover with Vitality Optimiser • Your clients could receive up to £100 cashback each year with Vitality Plus or Vitality Optimiser depending on how much their employees engage with Vitality • Fitter, healthier, more engaged employees that take less time off and are more productive • Available to companies of all sizes on an individual basis • Can be used as a ‘top-up’ to death in service benefit Clients can save nearly 50% tax (compared to an ordinary Life Policy) when they take out a Relevant Life Policy with PruProtect.

  7. RLPs – benefits for your client’s employees • Cash lump sum payment for terminal illness as well as death • Reward your client’s employees with our healthy living rewards programme • Access to a range of discounts and rewards to encourage your client’s employees to look after their health • Tax efficient – no National Insurance contributions • On payout, the cash lump sum is not subject to Income Tax or Inheritance Tax. If they leave the company, we’ll make it easy for them to take the policy with them, so they can ensure their cover continues • It doesn’t count as a retirement benefit so won’t affect their Lifetime Pension Allowance

  8. Vitality – what do you get?

  9. Vitality partners An example… Vitality partners Vitality Plus partners and Vitality Optimiser partners As at June 2014, Vitality Optimiser is available for a £3 additional fee and Vitality Plus for £4

  10. Tax saving example This example is for illustrative purposes only and is based on PruProtect’s understanding of the law and HM Revenue & Customs practice as at June 2014.

  11. Relevant Life Policy in contrast

  12. Three continuation options All without further underwriting… • Replacement policy - replace with a personal protection policy (if not yet reached 65th birthday) • Corporate - taken over by new employer (no age limit) • Personal - personally take over the policy on the same terms and conditions (no age limit)

  13. Documentation • Mandatory requirements Application and trust form • Recommended • Appointment of additional trustees • Expression of wishes document • Scotland only: • Mandatory requirements Application and trust form • Appointment of additional trustees • Recommended • Expression of wishes document Relative size of market for each need

  14. Some things you need to know… • Eligible - if ‘Schedule E’ taxpayer • An employee of a: • Sole trader • Partnership • LLP • Limited company • A shareholding director employed by a limited company • Ineligible - if not ‘Schedule E’ taxpayer • A sole trader • An equity partner • An LLP member • Employee must be between 16 and 70 (inclusive), and a UK resident • Minimum 1 year term. Cover must end before 75th birthday • Minimum monthly protection premiums apply • For Vitality Optimiser there is a minimum 5 year term and a minimum monthly protection premium of £20 • Online application and editable trusts • Indexation option available so cover increases in line with inflation • High cover limits – no upper limit, provided the cover is justifiable – typically 15 or 20 times remuneration (dependent on age) ‘Remuneration’ defined as: • Salary • Bonuses • Dividends; and • P11d benefits

  15. Our strengths • Online application and editable trusts • Indexation option available • High cover limits – up to 15 or 20 times remuneration (dependent on age) • Three continuation options, all without further underwriting • Tax savings calculator • Avelo Exchange, Assureweb & Webline portals • Large case underwriting assistance • Local and specialist support

  16. Our Relevant Life Policy literature and tools • RLP Tax Saving Calculator • Vitality for Business pitchbook • RLP with Vitality technical article • RLP FAQs • RLP pitchbook • RLP client sales aid • RLP Tax-Saving sales aid • RLP letter templates • RLP Adviser and Client Guides • Business Protection client sales aid • RLP application form • Vitality Calculator

  17. Editable trust documents

  18. Thank you

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