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In the UK, Key Person Insurance can be held in trust, which can provide some tax advantages. However, holding it in a trust can bring added complexity, meaning the death benefit may not paid to the company in a timely manner.
What is Key Person Insurance?
What are the benefits of holding Key Person Insurance in trust in the UK?
Key Person Insurance is a type of life insurance policy that is taken out by a company on a key employee. The death benefit from the policy is paid to the company, which can use it to cover expenses such as recruiting and training a replacement, or to help with the financial impact of the loss of the key employee.
Companies that rely heavily on one or two key employees may want to consider Key Person Insurance. The death of a key employee can have a significant financial impact on a company, and Key Person Insurance can help to mitigate that risk.
In the UK, Key Person Insurance can be held in trust, which can provide some tax advantages.
Trusts can offer tax advantages and can help to ensure that the proceeds of the policy are paid out to the intended beneficiaries. Trusts can also offer some flexibility in how the proceeds are used and can help to protect the policy from claims by creditors.
However, it can take longer to receive the benefits from Key Person insurance if the policy is held in a trust.
Life insurance can be a tax deductible business expense in certain cases. For example, if the life insurance policy is taken out on a key employee, the premiums can be deducted as a business expense. Additionally, if the life insurance policy is used as collateral for a business loan, the
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