The importance of life cover for key employees, including directors and director/shareholders cannot be over emphasised. Of course, the more valuable the employee, the more expensive the premium is likely to be with a good rule of thumb for life insurance cover being 7 x annual salary.
However, one benefit of the current tax regime is that life cover, if taken out by the company, can be treated as an expense for tax purposes and is therefore allowable against corporation tax.
For this to work, the company must be limited liability and the legislation does have some limits to qualify for the tax concessions, and to ensure these are met, it requires that:
It is also important to consider putting your life cover in trust so that any payments made under your policy are made quickly and are excluded from your estate for the purposes of Inheritance Tax.
For more information speak to a life cover adviser on 01628 507477 or contact us .
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