Case Study: Family Income Benefit
Mr & Mrs Armitage wished to provide an income for their two daughters should either parent pass away during the children’s education period.
With the daughters aged 7 and 9 and education running until the age of 23 typically, the clients wanted to ensure school fees could be maintained in the event of their death. With some 16 years to go, protecting against this eventuality was their key address.
Haven Protect Limited set up a joint life, first death “family Income Benefit” plan, that in the event of either death, would provide £30,000.00 per annum to cover school fees.
This type of plan pays a tax free income to the nominated beneficiaries until the plan term expires. Often this plan is used to supplement the loss of income into a household.
It can be either on a single life or joint life basis, with the option to have a joint plan or one each for a couple.
This is a low cost form of protection as it is a form of decreasing term assurance.
Case Study: Relevant Life
Mr Smallwood runs his own Limited Company and wanted to provide life assurance for his wife and family should his death occur prior to retirement age.
The cover required was £400,000.00 over 37 years.
Usually most people pay for the cost of life assurance from their own personal bank account, out of taxed income.
With Mr Smallwood, we set up a life assurance plan sponsored by his employer and paid from the Company bank account. Not only is this a tax deductible item in the Company accounts, but there is no benefit in kind issue here. The plan was written in Trust for his beneficiaries, therefore ensuring the sum assured would be paid outside of his estate preventing any inheritance tax liability.
The plan used here was a Relevant Life plan, allowable by HMRC as a tax deductible business expense. This doesn’t impact on the clients personal tax calculation, however, saves Corporation tax in his Limited Company.
The use of a Trust helps ensure funds pass down the family bloodline without increasing the life assured's estate value.
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