Continuing our series examining myths surrounding business protection, Zurich’s Paul McDowell explores if a relevant life policy can be used as a business protection tool…
The protection industry has frequently marketed relevant life cover under the heading of business protection, for convenience as much as anything else.
Though it’s true that employers set them up and pay the premiums, the one entity that remains ineligible to receive any benefits from the policy is the employer. Thus, relevant life policies are clearly not suitable as a form of key person cover.
Some advisers have told me they use relevant life for the purpose of shareholder protection. In some (very limited) circumstances, this could work. However, there is no guarantee this method will deliver for shareholders. Let’s not forget relevant life policies are more akin to one-man death in service schemes, without the pension tax implications but with the added bonus that they are portable.
