Here’s everything you need to know about relevant life insurance for mums to help you decide whether it’s the right fit for you.
Relevant life insurance is a great option for mums who own businesses. This type of insurance policy can be taken out by a company to provide life insurance for an individual employee. And this happens to be a great way to attract and retain high-quality employees.
Want to learn more about relevant life insurance for mums who own businesses? In this guide we’ll explore the benefits, drawbacks and cost implications. Read on to unveil all.
What is Relevant Life Insurance
Relevant life insurance is an insurance policy that business-owning mums can take out for an individual employee. Basically, it’s an alternative way employers can provide benefits for staff that die while in their employ as opposed to a group life policy.
Relevant life insurance gives employees the perk of free life insurance. It is applied for and paid for solely by the company. Much like regular life insurance, relevant life insurance is written into trust and will pay out a lump sum to named trustees in the event the employee dies or is diagnosed with a terminal illness.
Relevant life insurance is a benefit that makes employees feel appreciated. Plus, it’s tax-efficient for both the business and the employee too.
What is the Difference Between Relevant Life Insurance & Term Life Insurance
The key difference between the two types of cover is that relevant life cover can offer significant savings on premiums when put through a business when directly compared to a personal life insurance policy.
This is mainly because relevant life policies are owned and paid for by a company rather than the individual whom the policy covers. When taking out a personal life insurance policy, it is paid for out of your net income. This is after both tax and National Insurance contributions have been paid.
With relevant life insurance, this is not the case. Instead, the cost of premiums are deducted as a business expense which allows the company to save on corporation tax and National Insurance contributions.
There are also no costs to the employee given that the relevant life insurance policy is paid by their employer.
These savings combined make relevant life insurance a significantly cheaper option if you own a business and can’t afford a comprehensive group protection programme, relevant life insurance is a cost-effective solution to set up individual death-in-service benefits for personnel.
What Does Relevant Life Insurance Cover
Relevant life insurance is a safety net that offers financial support for an individual employee. Should a person with relevant life insurance die or be diagnosed with a terminal illness while in your employ, their named beneficiaries will be given a lump sum payment. This is generally a specified amount times their usual salary.
Just like personal life insurance, relevant life insurance is there to replace lost income; safeguard against any outstanding debts; and ensure that the employee’s survivors are financially supported while coming to terms with the loss of their loved ones.
The only real difference is that the policy is paid for by the business, not the individual.
What type of mums would a relevant life insurance policy benefit?
Relevant life insurance policies are beneficial for most types of mums including mums who own businesses, working mums, single mums, new mums and mums of all ages. Let’s look at this a little more in depth.
- Mums who own business. Where a business is too small to qualify for a group life insurance policy, relevant life insurance is a great way to effectively attract and retain high-quality employees. Plus, this employee perk can be written off as a business expense.
- Working mums. For working mums, relevant life insurance can be very attractive in a prospective role. Protect your income and ensure that your family is financially supported whatever life throws your way.
- Single mums. Again, single mums could massively benefit from a relevant life insurance policy. As a single mum, you could be solely responsible for your child’s financial stability. A relevant life insurance policy offers the exact same financial safety net as personal life insurance but, at the cost of your employer.
- New mums. New mums adjusting to all the additional costs of looking after a little one would also benefit from a relevant life insurance package. By transferring the responsibility for the fees from yourself to your employer, you’ll save on monthly premiums on top of all those other expenses you’re suddenly faced with.
In short, relevant life insurance is a win-win for both businesses and employees.
What are the drawbacks to relevant life insurance for mums?
The one thing to remember with a relevant life insurance policy is that you are only covered while you are employed by the business paying your premiums.
That said, many relevant life insurance policies can be transferred in the event that you switch companies. You’d just have to ensure that your new employer is willing to cover your relevant life insurance costs during the salary negotiation stages.
Mums who own businesses that are considering taking out relevant life insurance for their employees should always compare options and prices. Look for the most cost-effective way to offer financial security for your staff. A larger business may find that a group life insurance policy is more affordable.
Why Secure Relevant Life Insurance if you are a Mum with a Business With Mummy Insurance
At Mummy Insurance, we’re dedicated to delivering quotes from all top UK insurers. We’ll also help you to conduct a full comparison of your relevant life insurance options and ensure you find the right fit for your business. We can also help you compare prices between relevant life insurance and group life insurance to make a cost-effective decision. All of our quotes are completely personalised. Plus, our experts are always on hand to help guide mums who own businesses through the entire process from start to finish.
