introducing relevant life policies
DESCRIPTION
Introducing Relevant Life Policies. Pitchbook. For advisers. What is a Relevant Life Policy?. Defined in Income Tax (Earnings & Pensions) Act 2003. Life cover only Employer sponsored Single life assured No surrender value Policy ends before age 75 - PowerPoint PPT PresentationTRANSCRIPT
1VITALITY.CO.UK/LIFE
Introducing Relevant Life Policies
2
WHAT IS A
RELEVANT LIFE
POLICY?• Life cover only
• Employer sponsored
• Single life assured
• No surrender value
• Policy ends before age 75
• Benefits in trust created at outset (for an individual or charity)
• Not part of employees annual pension or lifetime allowance
• Main purpose of the policy must not be tax avoidance
Defined in Income Tax (Earnings and Pensions) Act 2003
3
THE
OPPORTUNITY
• A great employee benefits package for SMEs with low buying power to provide employee benefits
• SMEs that are too small for ‘death in service’ benefits
• Company directors looking to save on tax
• Flexible cover - reward specified employees or provide variable cover
• High earners – Relevant Life Policies do not count towards Lifetime Allowance
Which of your corporate clients:
• Would like to reward their top employees?
• Would like to be able to offer a benefit to retain their top people?
• Would like to make their recruitment package more attractive?
4.85 million
SMEs in the UK
4
WHO ELSE CAN
BENEFIT?
Company directors
• Directors of limited companies can enjoy valuable tax benefits if the premiums for life insurance are paid by one company instead of from personal income after tax.
Flexible cover
• A Relevant Life Policy can provide individually calculated cover levels so are suitable where companies only want to reward several employees or provide variable cover.
High earners
• The benefits of Relevant Life Polices do not count towards the current Lifetime Allowance of £1.25 million, above which tax is currently charged at 55% tax (on death).
A Relevant Life Policy is suitable in many situations, not just SMEs looking for life cover or an employee benefits package
5
BIG BUSINESS
BENEFITS FOR
SMALL
BUSINESSES
Relevant Life Policies from VitalityLife allow you the chance to offer your clients a benefits package for their employees.
Not only does that help with recruitment and retention but healthy employees are: •more engaged
•take less time off
•more productive
On top of all that, if your clients take out Vitality Plus or Vitality Optimiser, they can also get cashback (based on how much their employees engage with Vitality).
6
VITALITY PLUS
AND OPTIMISER
CLIENT
BENEFITS
• Tax efficient – a tax deductible business expense and no National Insurance contributions
• A great employee benefit for small businesses, life cover and
a healthy living rewards programme that can help attract and retain the best people
• More affordable cover – An upfront discount on the protection
premium of between 5 – 20% for fixed term cover with Vitality Optimiser
• Your clients could receive up to £100 cashback each year with Vitality Plus or Vitality Optimiser depending on how much their employees engage with Vitality
• Fitter, healthier, more engaged employees that take less time off and are more productive
• Available to companies of all sizes on an individual basis
• Can be used as a ‘top-up’ to death in service benefitClients can save nearly 50% tax (compared to an ordinary Life Policy) when they take out a Relevant Life Policy with
VitalityLife.
7
BENEFITS FOR
YOUR CLIENTS
EMPLOYEES
• Cash lump sum payment for terminal illness as well as death
• Reward your client’s employees with our healthy living
rewards programme
• Access to a range of discounts and rewards to encourage your
client’s employees to look after their health
• Tax efficient – no National Insurance contributions
• On payout, the cash lump sum is not subject to Income Tax or
Inheritance Tax. If they leave the company, we’ll make it easy for them to take the policy with them, so they can ensure their cover continues
• It doesn’t count as a retirement benefit so won’t affect their
Lifetime Pension Allowance
VITALITY.CO.UK/LIFE
8
Discounts and Rewards with VitalityLife
Monthly cost
Upfront discount
Cashback for employer each year
Premium discount for
employer each year
Discounts and savings for employees
Additional rewards for employees
including 50% off monthly
gym fees and a cinema ticket every week
Healthier, fitter, more engaged
and more productive employees
Vitality Optimiser
£3.30*
Vitality Plus £4.50*
Vitality FREE
*prices applicable from 1st February 2015
VITALITY.CO.UK/LIFE
9
Vitality: incentivising behavioural change
Reward and discount partners
Vitality Plus and Vitality Optimiser partners
VITALITY.CO.UK/LIFE
10
Tax saving example
This example is for illustrative purposes only and is based on VitalityLife’s understanding of the law and HM Revenue & Customs
practice as at December 2014.
VITALITY.CO.UK/LIFE
11
Relevant Life Policy in contrast
Relevant Life Policy
Death in Service Personal Cover
Variable cover per life assured
Y N Y
Minimum members 1 5 1
Individual applications
Y N Y
Employer sponsored employee benefit
Y Y N
Tax efficient employer/employee
Y Y N
Online application Y N Y
Medical free limits N Y N
12
THREE
CONTINUATION
OPTIONS • Replacement policy - replace with a personal
protection policy (if not yet reached 65th birthday)
• Corporate - taken over by new employer (no age
limit)
• Personal - personally take over the policy on the
same terms and conditions (no age limit)
All without further underwriting…
13
Relative size of market for each need
DOCUMENTATION
Mandatory requirements Application and trust form
RecommendedAppointment of additional trusteesExpression of wishes document
Scotland only:
Mandatory requirements Application and trust formAppointment of additional trustees
RecommendedExpression of wishes document
14
SOME THINGS
YOU NEED TO
KNOW…
‘Remuneration’ defined as:
• Salary
• Bonuses
• Dividends; and
• P11d benefits
Eligible - if ‘Schedule E’ taxpayer
• An employee of a:
• Sole trader
• Partnership
• LLP
• Limited company
• A shareholding director employed by a limited company
Ineligible - if not ‘Schedule E’ taxpayer
• A sole trader
• An equity partner
• An LLP member
15
OUR STREGTHS Online application and editable trusts
Indexation option available
High cover limits – up to 15 or 20 times remuneration
(dependent on age)
Three continuation options, all without further underwriting
Tax savings calculator
Avelo Exchange, Assureweb & Webline portals
Large case underwriting assistance
Local and specialist support
VITALITY.CO.UK/LIFE
16
• RLP Tax Saving Calculator
• Vitality for Business pitchbook
• RLP with Vitality technical article
• RLP FAQs
• RLP pitchbook
• RLP client sales aid
• RLP tax-saving sales aid
• RLP letter templates
• RLP Adviser and Client Guides
• Business Protection client sales aid
• RLP application form
• Vitality Calculator
Our Relevant Life Policy literature and tools
VITALITY.CO.UK/LIFE
17
Editable trust documents
VITALITY.CO.UK/LIFE
Thank you