Life Assurance Cover

Who Needs Life Assurance Policies?
Family protection doesn’t just mean life insurance. It can include critical illness cover, plans to cover mortgage and plans to cover loss of income due to illness. With the right protection in place, your loved ones won’t have to worry about money when money is the last thing they want to worry about.

Many people discount the need for life assurance until it is too late. It’s about helping to ensure that your loved ones lead the life you want for them, whether you are there to provide it or not. No-one expects to die, but sadly people do. The office of National Statistics record that in 2011, the statistics for England and Wales for people dying before the age of 64 were:

Age 35-44

9,131 deaths

5,711 males

3,420 females

Age 45-54

19,988 deaths

11,883 males

8,105 females

Age 55-64

42,706 deaths

25,492 males

17,216 females

Age 65-74

78,591 deaths

46,144 males

32,447 females

Age 75-84

143,422 deaths

74,171 males

69,251 females

Source: Office of National Statistics

Protect your loved ones if you die
Life insurance is designed to protect your family or other dependants from the financial consequences of your death. Will your children grow up enjoying the education that you have planned if one of you dies? Will they have the home life you have both anticipated? How will the family manage with one income less? These are all questions that you need to ask now – when you are both alive. Hopefully, all will be well, but have you thought about and planned for the possibility that your financial future might not be secure?
By putting in place the right level of life assurance, you are taking an important step towards making sure that the people you care about – and who depend on you financially – will not face major money worries if you die.
Clients might not wish to see monthly payments going out to pay for life assurance policies, but they never complain if the policy pays out.

Critical Illness Protection

Protect you and your loved ones if you suffered a serious illness
Critical Illness insurance aims to provide the same security and peace of mind for you and your family – but this time against the financial effects of you being diagnosed with a serious illness. It’s a scary thought but the average cost of raising a child to the age of 17 in the UK today is £165,649, according to the 2012 Cost of a Child Report*. If you’re the one whose income covers these costs what would happen if you weren’t around?
* Source: Cost of a child Report from LV= 2012

Protect you and your loved ones from loss of income
Income Protection insurance provides a financial safety net if you are unable to work through serious illness or accidental injury.

Plan for your future
The best way to protect your loved ones is by making your own financial protection arrangements in good time. Your financial adviser will be able to help you put plans in place to ensure that money is available when you or your family need it most.

Company Protection

Keyman Assurance

Keyman insurance is for businesses where you rely on individual people and where their absence would affect the cash flow of your business.

Relevant Life Cover

Relevant life cover is for directors and employees of companies. It provides basic life assurance, no bells, frills or whistles. It is a stand-alone death-in-service plan. As it is a death-in-service plan it is provided by the employer (business) without any tax consequences for the employee (director). In other words, it is a benefit the business can provide but without the director suffering tax and national insurance on this benefit. Usually the business will be able to claim corporation tax on the premiums. The only situation where this will not hold true is if the Revenue can successfully argue that the payment was not “wholly and exclusively for the purpose of the trade”. Proper advice from the company accountant should anyway avoid the likelihood of this ever arising.

The lump sum paid out on death will not be added to the individual’s lifetime allowance. This means a Relevant Life Policy has a big advantage over death-in-service in a registered pension scheme if your client is at or close to the lifetime limit. It is also particularly useful for a client who has protected a higher lifetime limit, as taking out a Relevant Life Policy is not regarded as a further contribution, which would then remove the protection.

The tax benefit of writing life insurance as a Relevant Life Policy can be huge.
Imagine if you are prepared to pay a £1,000 premium for life insurance. If you take out normal life insurance and pays for it yourself out of net income, and you are a 40% taxpayer, this means your company will have paid you £1,724 gross (with £690 income tax and £34 national insurance deducted). The company will then have paid £238 employers national insurance on this, giving it a total gross cost of £1,962. After 20% corporation tax relief of £392 the net cost to the company is £1,570.

But if you take out a Relevant Life Policy, the company pays the £1,000 premium, obtains 20% corporation tax relief of £200, and the net cost is only £800. The saving is therefore almost 50%! If you are a 50% taxpayer there will be a saving of nearly 58%. For some clients, trapped in one of the “super tax” bands (i.e. where there is a reduction in personal allowance, or an additional tax charge to recoup child benefit) the savings will be even greater than this.

Call Andrew Benson now on 01635 248 068 or email him at:



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Andrew Benson - Managing Director of Bow House

Over the past 25 years, Andrew has held several key positions with major financial organisations including international life companies and asset management organisations.

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