Reply to: Life and Critical Illness

[konsultant]

Thanks.

I did read about Aviva offering CI along with RLP but I have been advised to take CI as personal and not through business.


Does anyone have experience with Contractor Financials for Life/ CI insurance? Or used Lifesearch or any other broker?

Regards

[WordIsBond]

I have RLP for me and for two employees. Premiums are the same as personal insurance, at least with Aviva and L&G. That may not be the case with other providers.

Most RLP plans are easily transferrable to personal insurance if your employment changes. Simply ask and find out. Get it in writing, obviously. But it shouldn't be a problem.

Aviva offers Critical Illness cover with their Relevant Life Plans. L&G does not. I think I saw somewhere that someone else has now started offering CI as well. L&G won't quite say it is illegal but they call it risky, and say it risks their clients losing the tax benefit on their RLP for life if they wrap CI into it. Aviva has put their reputation on the line here somewhat (which is a big deal for an insurance company). I think they'll be at some risk of mis-selling if their CI thing gets tossed out, so may offer at least some compensation to their clients in that event. But I'd guess they are quite sure of themselves or they won't have put themselves on the line.

I have Life, CI, and Private Medical cover. Maybe I'm over-insured. But I'm bringing in a lot of money these days, and if a CI case hits, I want to be covered.

If something comes up that would hinder my ability to earn, I want to get it fixed quickly and not wait for the NHS. It really doesn't cost that much, even at my age (I'm older than most here), compared to missing a few weeks of billing. If I go on the shelf it may affect the ability of some of my employees to produce effectively, too.

[konsultant]

Yes, the premiums are exactly the same whether RLP or a personal.

It is just the added tax benefits and corp tax relief that I had in mind for taking RLP. Just making sure that it can be easily converted to personal if required.

[TheCyclingProgrammer]

Have you looked into how much a normal life assurance policy will cost you? It might not be as much as you think. Don't let the tax tail wag the dog.

[konsultant]

Thank you all for your replies so far.

I have been told that RLP can be converted to a personal policy if you move to salaried employment or dissolve your company, there is some paper work regarding trust but as long as you do within a specified time you should be ok.

Anyone actually have RLP here?

CI definitely not available through your company.

[TheCyclingProgrammer]

So this is relevant because I need to sort life cover. Is going Relevant Life going to screw me over later on if I close the company and have to source non-company insurance?

IIRC Relevant Life policies can usually be converted to standard life insurance policies in your name so worth looking into that.

My mortgage broker arranged my policies and we found that normal life assurance policies worked out cheaper or about the same compared to relevant life policies AFTER accounting for the tax saving so YMMV. We had to go with a slightly more expensive policy due to some previous medical history anyway.

[TheCyclingProgrammer]

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.

I have considered this. When I briefly looked into it it seemed really expensive and also no tax benefit in putting it through the business that I could see.

Like Maslins I'm not a big fan of insuring for everything and so don't have critical illness cover. I do have two life assurance policies, a joint one with my wife, decreasing term to cover the mortgage and also a separate one for myself to support my wife of the worst happens.

Who here has PHI and who with? Are you glad you've got it?

[knutefla]

I think it can make sense to take a private health care in order to minimize the impact on the business. It can be cheaper to pay for a service in order to have access to health care out of office hours and to be able to get appointments quickly to be back to work asap.

Most other topics about health care on this forum seems to be about tax implications. What about the service itself. Is it worth it ? Anyone has good or bad experience with private health care providers ? Does that make a real difference or is that just a waste of money ?

[kaiser78]

[QUOTE=vwdan;2360385]So this is relevant because I need to sort life cover. Is going Relevant Life going to screw me over later on if I close the company and have to source non-company insurance?[/QUOTE]

Correct

[vwdan]

So this is relevant because I need to sort life cover. Is going Relevant Life going to screw me over later on if I close the company and have to source non-company insurance?

[kaiser78]

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.

I have both as they apply in different ways. Depends on your level of risk exposure I guess.

[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.

[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

[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?

[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.