Protection tech info

Question 1

Rugby considerations

Answer 1

Life cover
Amateur-normal rates
Semi -greater details of injuries

CIC
Amateur-standard rates
Semi-interested in recent injuries-No Total Permenant disability

Income Protection
Amateur-specialist provider/reviewed on regular occ

Semi pro-Interested in any time off

Question 2

Relevant life (tax free lump sum death or terminal illness)

Answer 2

-Life cover
-Death in service
-Salaried employees and directors (S £54k)
-Tax free lump sum on simons death or terminal illness
-Company is police holder
-Simon is life assured
-Paid to Simon’s dependents GHE as long as financially dependent
Into a discretionary trust -no IHT
-not under pension rules so not included in calcs for LTA charge on S death
Company can claim tax deductible business expense for Corp tax
Not a BIC-no NI for co on cost of premium and no Inc tax on value of benefit for Simon

Question 3

Executive income protection (regular taxable income paid if unable to work due to serious illness, disability)

Answer 3

Taxable income tax but counts as relevant earnings for tax relievable pension contributions

Higher level cover-more stringient u/w
Cannot be cancelled
Allows income to continue regular until retirement age
Cover includes

• ER Pension contributions
• Simons salary
• Dividends from WP Ltd
• Ni paid by employer

This enables state bens and pen cons continue

Because PAYE Simons pen cons can continue
More likely maintain lifestyles

Company pays a premiums and claim is paid to co who pay Simon via PAYE

Company continue making premiums until policy end date

Higher income paid that income pro

Company will keep making ER cons and S will be able to make tax relievable cons he will have a greater fund at retirement age than under personal income pro

Question 4

IPvExecVASu

IP & ASU inc tax free
Exec taxable

Answer 4

Ben level IP/Exec 65-% of salary exec 80%
ASU 60-65% of salary or fixed amount mortgage & monthly earnings

Underwriting IP/Exec stringient UW but more chance payout. ASU less underwriting but less chance payout

Tax free payment IP tax free income , EXec income paid as PAYE taxable , ASU tax free

Indexation IP/Exec yes indexed, ASU no indexed

Terms IP/Exec set to RA, ASU can set to Ret age (S is 2021)

Deferred period IP/Exec 1-12 months, ASU is 30-90 days /S is 30’days

Max claim period IP/Exec pay out til policy end date i.e Ret age,

ASU 12-24 months -we don’t know what Simons is

Permanent benefit IP/Exec -yes as long as premiums continue. ASU can be cancelled by Co and dies with 1 claim

Proportional Bens IP/Exec yes ASU no

Guaranteed IP/Exec yes ASU no

Reviewable IP Exec yes ASU yes

Unemployment IP/Exec no ASU yes (S doesn’t need redundancy as he is company)

Question 5

DTA

Answer 5

Ben’s

Tax free
Cheap/covers only what you need
Underwriting should be easy because healthy
Will repay mortgage if they die

Cons 
Doesn’t include CIC
Pays out set amount no more
If health decreases then insufficient life cover 
No investment content

Question 6

Why income pro

Answer 6

Pays tax free income until Simons ret age maintain lifestyle

Cannot be cancelled if premiums continue

Own occ to maximise chance of pay out

Defer 3 months (not sure what employers deferral period is)

Based on Simons salary

Include indexation

Guaranteed premiums for known cost
Partial proportion to allow him to part time

Question 7

RLT amount loss of income and share value

Income pro simon salary

DTA mortgage JL1D 24yr 275 and CIC

Answer 7

As above