Life Assurance vs. Relevant Life Insurance:
A Comprehensive Guide
Understanding the Basics
While both life assurance and relevant life insurance are designed to provide financial protection for loved ones in the event of death, they have distinct characteristics and benefits.
Life Assurance
- Coverage: Provides lifelong coverage, ensuring a payout regardless of when the policyholder dies.
- Premiums: Typically more expensive due to the guaranteed coverage.
- Ownership: Owned by the individual policyholder.
- Tax Implications: Payouts are generally tax-free.
- Common Use: Inheritance tax planning.
Relevant Life Insurance
- Coverage: Provides coverage for a specific period, often tied to employment.
- Premiums: Generally less expensive than life assurance due to the limited coverage term.
- Ownership: Owned by the business.
- Tax Implications: Premiums are typically tax-deductible for businesses.
- Common Use: Employee benefits and business protection.
Key Differences
- Coverage Period: Life assurance offers lifelong coverage, while relevant life insurance covers a specific period.
- Ownership: Life assurance is owned by the individual, while relevant life insurance is owned by the business.
- Premiums: Life assurance premiums are generally higher, while relevant life insurance premiums are often lower.
- Tax Benefits: Relevant life insurance premiums are typically tax-deductible for businesses.
Financial Benefits for Businesses
Businesses that offer relevant life insurance can enjoy several financial advantages:
- Reduced Corporation Tax: Deductible premiums can lower corporation tax.
- No National Insurance: No National Insurance contributions on payments.
- Improved Employee Morale: Offering this benefit can boost employee satisfaction.
Choosing the Right Option
The best choice depends on your specific needs and circumstances. Consider:
- Coverage Period: If you need lifelong coverage, life assurance might be suitable. If you’re primarily concerned with short-term protection, relevant life insurance could be a better option.
- Budget: Life assurance can be more expensive, while relevant life insurance offers cost-effective protection.
- Tax Implications: If you’re a business owner, relevant life insurance can provide tax benefits.
Contact Us Today
At BRIGHT LIFE, we offer a range of flexible and affordable life insurance and relevant life insurance solutions.