Company Director Life Insurance: Why You Should Get One

Are you a director of a particular company? Do you have to pay monthly premiums for the life cover on your own? If yes, you are yet to know the tax-efficient and affordable way of opting for a life cover! Well, what happens in the traditional method is that you pay the premium either from your company account or from your post-tax earnings. As a result of this, you become liable for tax payments. This is where a company director life policy helps you out the best as you can save a lot on the tax payments.

The best thing about this type of a policy is that the cost of the premium is borne by your employer, and not by you. Moreover, you won’t be financially responsible for the P11D benefits. In fact, the premiums are considered as an allowable expenditure when it comes to corporation tax payments for the employer. Thus, opting for a director life insurance policy helps save a lot on tax payments which is not possible while opting for a conventional life insurance cover.

How a company director life cover benefits the director of a company

1. Easy access to the company shares – One of the greatest advantages of this policy is that if you pass away unexpectedly, your co-partners are not exposed to any abrupt risks and they can avail the shares without any economic problems. This is why the cover should be written in presence of all the co-directors of a company. This will enable them to buy the shares as and when it is required and your family members, too, would be financially secured. Thus, this type of cover provides complete financial assistance to the other directors.

2. Repay the mortgage loan – Most of the people opt for life insurance cover for financing their mortgage repayment and director’s life policy is a good option to do that. Keep it in mind that the cover should be set up at four to five times of your total annual income.

3. Consider the needs of your family – You have to keep in mind that your family would require financial support when you won’t be there. It is expected that your family features a high standard of living since you used to draw a considerable amount of salary. However, make sure they are able to continue with such kind of a lifestyle even after your death.

Well, these are some of the ways in which company director life insurance proves to be beneficial for a director of a company. Whether you need this type of policy or not depends upon certain factors like your financial condition, your income and expenses, how many shares you do hold in the company etc.