Life insurance for directors

Barney30

Anyone had any experience of taking up specific life insurance for directors? I have done a bit of reading on it. It seems you can save tax by going down this route. Is it worth looking into more? Any recommendations would help. Thank

InsideInsurance

The premiums tend to be a little higher as there are only 5 or so providers that offer it and so less competition but the inflation is not sufficient to outweigh the 40% tax saving (assuming you're a higher rate tax payer)

The only other consideration was, from memory, that index linking wasnt possible but that was an 11th hour thing that came out with the chosen provider and so may just be an issue with the Pru

loriya_thomas

Hi Barney

Yes, definitely there are benefits for taking life insurance for directors. It is used by the companies to get tax benefits. It's main benefits are explained below:

1. Employee's National Insurance Contribution @ 1% - Nil
2. Income Tax @ 40% - Nil
3. Employer's National Insurance Contributions - Nil
4. Corporation Tax Relief @ 21% - Contracted to 12.8%

It really cut down Company's Net Cost

kingstreet

Who is the desired beneficiary?

Are we talking about family protection, or is it keyman or co-director assurance you are seeking?

InsideInsurance

I assume they are talking about Relevant Life Insurance in which case the family of the insured is the beneficiary rather than it being a Keyman policy (still amuses me that JCB Finance dislikes it being called Keyman and wanted it renamed Keyperson).

At the moment it is tax deductable for the company and attracts no BIK

weighty1_2

InsideInsurance wrote: »

At the moment it is tax deductable for the company and attracts no BIK

Without wanting to appear anal about it, it is "potentially" deductible against corporation tax. It is all dependent on whether the local inspector of taxes allows it as a deductible expense. This is why it is generally recommended that the arrangement is recorded within the minutes of a board meeting to show that it is a commercial arrangement as opposed to a personal one simply being paid via the company.

OP, I write lots of these plans. If you type "relevant life policy calculator" into Google you should see the first hit is with Scottish Provident. If you input the necessary figures into their calculator you'll see just how much more effective it is to take cover as a relevant life policy than as a personal plan depending on whether you normally pay yourself predominantly in dividends or salary.

kingstreet

InsideInsurance wrote: »

I assume they are talking about Relevant Life Insurance in which case the family of the insured is the beneficiary rather than it being a Keyman policy (still amuses me that JCB Finance dislikes it being called Keyman and wanted it renamed Keyperson).

At the moment it is tax deductable for the company and attracts no BIK

Yeah, I was guessing it was a relevant life policy, but I thought I'd check.

Barney30

Thanks for your advice and yes it was reference to relevant life policy.

jenniemiller177

Think the premiums are a little higher, however there are the tax benefits. Found a calculator to see how much you can save http://www.insurance4directors.com/how-much-could-i-save.aspx