Relevant Life Policy: Benefits & When It’s Right for Your Business

Relevant Policy: When Do You Need It? – A Comprehensive Guide

Beyond Death-in-Service Benefits

The concept of Relevant Life policies has emerged as a strategic tool for employers, particularly those in limited companies seeking to establish death-in-service benefits for their employees.

However, this valuable option often gets misconstrued as solely relevant for small companies that lack the employee count needed for a Group Life Scheme.

While Relevant Life Cover does cater to smaller businesses with at least five employees, its benefits extend far beyond simply replacing Group Life Insurance.

This comprehensive guide delves into the unique advantages and considerations associated with Relevant Life policies, helping you understand their true value as an investment for your employees and your company’s overall success.

Building a Competitive Employee Benefits Package

In today’s competitive job market, attracting and retaining top talent requires offering a comprehensive employee benefits package. While larger companies often provide perks like post-retirement benefits, insurance schemes, and pensions, startups and smaller companies might struggle to offer such a robust benefits structure.

Relevant Life policies can be a strategic consideration for these growing companies, providing a valuable benefit without a significant financial burden. Let’s explore two key situations where Relevant Life Cover can strengthen your employee value proposition:

• Enhancing Employee Retention: Employees, especially high-potential ones, value financial security and a sense of being valued by their employer. When a company offers a Relevant Life policy, it demonstrates a commitment to the well-being of its employees and their families. This can significantly improve employee morale, loyalty, and ultimately, reduce turnover. Studies have shown that a strong employee benefits package can increase employee retention by up to 20% [Source: Society for Human Resource Management].

• Attracting Top Talent: In a competitive job market, offering a differentiated benefits package can be the deciding factor for top talent. A Relevant Life policy, especially when combined with other benefits like flexible work arrangements or professional development opportunities, can position your company as an employer of choice.

Unlocking Tax Advantages: A Win-Win Situation

One of the key benefits of Relevant Life policies lies in their potential tax advantages. Employers can claim tax relief on the premiums paid, provided they can be classified as legitimate business expenses. This translates to a cost-effective way to provide a valuable benefit to employees.

However, it’s crucial to emphasize that tax avoidance shouldn’t be the sole motivator for opting for this insurance. The primary focus should be on providing a meaningful benefit to your employees while enjoying the additional advantage of potential tax deductions.

Tailored for High Earners: Maximizing Benefits

Relevant Life Insurance proves particularly beneficial for high-earning employees. The payout from this policy falls outside their pension allowances, allowing them to maintain a separate pool of funds independent of their potentially high pension contributions.

This ensures that their families receive a significant financial cushion in the unfortunate event of their passing, without impacting their pension benefits.

The Right Approach to Relevant Life Policies: Research & Communication

Having gained a basic understanding of how Relevant Life Cover can benefit your company and your employees, it’s essential to conduct thorough market research before implementation. Here are some key steps to ensure a successful implementation:

• Market Research & Cost Comparison: Utilize online resources and insurance brokers to compare quotes and coverage options from different providers. Consider factors like the insurer’s financial strength, claim settlement ratios, and customer service reputation. Tools like Relevant Life Calculators can be helpful in quantifying the cost difference between offering a death-in-service benefit through a Relevant Life policy versus a conventional life insurance policy.

• Effective Communication with Employees: Once you’ve chosen a Relevant Life policy provider, clearly communicate the value proposition to your employees. Explain how the policy works, the benefits it offers, and how it demonstrates your commitment to their well-being. Highlighting the financial security it provides for their families can be particularly impactful.

Beyond Popularity: Building Confidence Through Expertise

While Relevant Life policies have gained popularity recently, they haven’t yet reached the widespread adoption of traditional life insurance policies. Here’s how you can navigate this situation:

• Seeking Expert Guidance: For a comprehensive understanding of the intricacies of Relevant Life policies, consider consulting a financial advisor specializing in employee benefits. They can provide valuable insights into various aspects of the policy, including cost comparisons, claim processes, and tax implications.

• Consulting a Tax Lawyer: Since tax efficiency is a key benefit of Relevant Life policies, consulting with a tax lawyer can provide a clear understanding of the current tax regulations and how they apply to your specific situation. This ensures you maximize the tax advantages associated with the policy, and understanding the value proposition for both your company and your employees are crucial steps before implementing this innovative employee benefit.

Beyond Basic Coverage: Exploring Additional Features

While death-in-service benefits are the core offering of Relevant Life policies, some providers offer additional features that can further enhance their value proposition:

• Critical Illness Cover: This optional add-on provides a lump sum payout if an employee is diagnosed with a critical illness, such as cancer, heart attack, or stroke. This financial support can be invaluable during a difficult time.

• Income Protection: Another valuable add-on, income protection offers a regular income stream to the employee if they are unable to work due to illness or disability. This can help maintain financial stability for the employee and their family.

• Flexible Cover Levels: Relevant Life policies often allow for flexibility in terms of the level of cover provided for each employee. This allows you to tailor the benefit to different employee groups or seniority levels.

Making the Right Choice: Considerations for Different Company Types

While Relevant Life policies offer significant advantages for companies of all sizes, there are some specific considerations depending on your company structure:

• Startups & Small Businesses: For startups and small businesses with limited resources, Relevant Life policies can be a cost-effective way to offer a meaningful death-in-service benefit without the complexities of Group Life Schemes. Their flexibility in terms of coverage levels allows you to start small and scale up as your business grows.

• Established Businesses: Established businesses with a larger workforce can leverage Relevant Life policies to provide targeted death-in-service benefits for key employees or executives. This can be particularly valuable for attracting and retaining top talent. Additionally, Relevant Life policies can be used to complement existing Group Life Schemes by offering higher coverage levels for specific employees.

The Future of Employee Benefits: A Continuously Evolving Landscape

The landscape of employee benefits is constantly evolving, with new trends and innovations emerging. Relevant Life policies are a prime example of this evolution, offering a flexible and tax-efficient way to provide death-in-service benefits.

As companies strive to attract and retain top talent, Relevant Life policies are likely to play an increasingly important role in employee benefit packages.

Taking Action: The First Steps Towards Implementation

If you’re considering implementing a Relevant Life policy for your company, here are some initial steps to take:

• Conduct a Needs Assessment: Evaluate your current employee benefits package and identify any gaps that a Relevant Life policy could address. Consider the size and needs of your workforce, as well as your budget constraints.

• Develop a Implementation Plan: Once you’ve determined that a Relevant Life policy is the right fit for your company, develop a plan for implementation. This includes selecting a provider, determining coverage levels, and communicating the policy to your employees.

• Ongoing Review and Communication: Regularly review your Relevant Life policy to ensure it continues to meet the needs of your employees and your company. Keep your employees informed about any changes or updates to the policy.

Final Thoughts

By understanding the advantages and considerations associated with Relevant Life policies, you can make an informed decision about whether this innovative employee benefit is right for your company.

With its potential to enhance employee retention, attract top talent, and offer tax advantages, Relevant Life policies can be a strategic investment in your workforce, contributing to the overall success and well-being of your company.