£1,000,000 of Relevant Life Cover for a Limited Company Director, Arranged Alongside a Buy-to-Let Mortgage
What was the situation?
Our client was a healthcare practice owner in his mid-thirties with a young family, well established in his practice and stepping into investment property for the first time. He approached LDN Finance to arrange a buy-to-let mortgage on the purchase of a London property, being acquired through his limited company.
As part of the mortgage process, LDN Finance identified a protection need arising from the new borrowing. Our advice was to put cover in place to provide for the client’s family in the event of his death, with the proceeds giving the family the financial means to clear the buy-to-let mortgage if they chose to.
What was the issue?
The sum assured needed to be set against the new mortgage liability and family provision, with premiums that were affordable and sustainable over the long term.
Above all, the policy needed to be arranged on a basis that reflected the client’s position as a director holding the borrowing inside a limited company.
What was the process?
Antony Cotchobos, Protection Adviser, identified Relevant Life as the appropriate basis for the cover. Relevant Life sits within HMRC’s defined arrangements for company-funded life cover, available to directors and employees of a UK limited company.
Antony set the sum assured against the new buy-to-let mortgage liability alongside wider family provision, with premiums funded by the limited company and qualifying in full for corporation tax relief. The policy was written into a discretionary trust from inception, directing the proceeds to the client’s chosen beneficiaries on death.
The trust structure released funds without waiting on probate and gave the client full control over beneficiary nominations.
What was the solution?
A Relevant Life policy of £1,000,000 was put in place for the client, with the buy-to-let mortgage completing alongside. The proceeds were placed outside the client’s estate, with the trust structure directing the funds to the family on his death.
This is the LDN approach: property finance and protection advised on together, with both reviewed and structured as the client’s position develops. For specialist advice on relevant life cover visit https://ldnfinance.co.uk/protection/business/relevant-life-cover/
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Relevant life cover is being increasingly used by small businesses to attract and retain highly experienced employees as part of an attractive benefits package. The policy pays out a tax efficient lump sum amount in the event of the death or diagnosis of a terminal illness of the employee insured. This sum goes directly to your employee’s family or financial dependants.
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