Life and Critical Illness

[konsultant]

So, I have been speaking to some advisers regarding getting life insurance and they have pointed me to Relevant Life Policy (RLP) for tax purposes.

Is it quite common for contractors to have this? Reading up on the forum there appear to be many threads on it - is there any downside or things I need to be sure to check before I take RLP?

Also, what kind of other insurance do people have in here of personal nature? I have a private health insurance so I am not sure if I need a critical illness insurance? Or Would it be sensible to get rid of private health insurance and only have critical illness ?

Thanks in advance

[Neil@Intouch]

Relevant life insurance is an expense that contractors do put through the company, depending on the terms in the policy would depend on whether this would attract a benefit in kind. There a few policies that would avoid a benefit in kind.

Health & critical illness insurance are again allowable expenses against the company, but would be a benefit in kind. The taxable benefit would be the premium paid between 6 April & 5 April each year. This would then be included on the a P11d, which is reported to HMRC. The company would pay 13.8% in Class 1A NIC to HMRC.

The taxable benefit would also be included on your personal tax return under the employment section, which would use up some of your basic rate tax band and be taxable according to the tax rates & bands this would fall into.

[northernladuk]

I didn't think relevant life attract BIK??
http://www.contractoruk.com/insuranc..._policies.html

[Neil@Intouch]

I didn't think relevant life attract BIK??
Relevant Life Cover Policies :: Contractor UK

The link below confirms that there are no benefit in kind considerations on relevant life. My advice was just to double check the policy to be sure.
How contractors can save tax on life cover :: Contractor UK

[northernladuk]

:

[Maslins]

Yeah I never quite understood the reasons why, but it seems relevant life policies can be paid for by the company WITHOUT it triggering a BiK on the individual, whereas more general health/life insurance policies do.

As to whether things like critical illness is a good idea, everyone's opinion will vary, and it's not really a tax/accounting question. I don't have it, partly because I'm cynical that the insurance company would try to wriggle out of paying if I ever did feel I need it ("Oh, that illness isn't quite critical enough"), partly cos I think insurance is surely a net loss game overall, so my view is to just be prudent so if disaster strikes you can cope without needing an insurance payout. Obviously others will have wildly different views that are no less valid.

[cojak]

I'm with you Maslin, but I would go with Private Health insurance rather than critical illness. You want things to be fixed fast to reduce loss of billing - the NHS can't give you this.

[Fred Bloggs]

Maybe it has something to do with relevant life policies intended to be for real businesses with a real interest in protecting the business rather than one man bands?

[DeadEyedJacks]

Terminal, Critical, Acute or Chronic ?

So, I have been speaking to some advisers regarding getting life insurance and they have pointed me to Relevant Life Policy (RLP) for tax purposes.

Is it quite common for contractors to have this? Reading up on the forum there appear to be many threads on it - is there any downside or things I need to be sure to check before I take RLP?

Also, what kind of other insurance do people have in here of personal nature? I have a private health insurance so I am not sure if I need a critical illness insurance? Or Would it be sensible to get rid of private health insurance and only have critical illness ?

Thanks in advance

Hi,
When we looked into this we found that personal life insurance policies were less expensive than RLP, due to the more competitive market I guess.
I also thought that RLP was paid to the company rather than a named beneficiary, so your surviving partner would have to extract from company somehow? Might be wrong.

Critical Illness relates to potentially terminal conditions and is there to ease your final days.
Private Health is for acute conditions that can be quickly resolved and get you back earning.
Two very different things...

HTH

[kaiser78]

I was looking into this also last year and found that RL providers offered Life cover only and not CI. This may have changed now, but for me CI is a key requirement and so I went for a joint CI/Live policy.

So whilst RL cover is expensable be careful when looking into this and base on what your requirements are.