You qualify for Family First as long as you are an executive Owner or Director of a UK Limited Company.

There is no limitation on the size of the company.

We have clients ranging from one-person Contractors to companies with several thousand employees and with operations around the world.

Yes, a spouse — or any other family member — can take out cover if they are an employee or Director of the company.

You can take out Family First cover of up to £1,000,000 as long as you are an executive Owner or Director.

However, for amounts over £1,000,000 your cover will be limited to a multiple of your total business income.

Business income is the total of: salary, fees, dividends, pension payments and other benefits.

That multiple changes with age as follows:

For example: say John is aged 45 and his income from his company is:

Then John can take out up to £2.5 Million of Family First protection.

If John was aged say 55 then he could take out up to £2 Million of protection.

You choose how long you want protection for. Many clients take out a policy to their intended retirement date.

Increasingly, we find that clients wish protection beyond the traditional retirement age of 65. In which case, Family First can be taken out to a maximum age of 74.

It depends on the nature and severity of the condition.

We will apply on your behalf and your case will be assessed by medical underwriters. You will likely be asked to have a medical and your GP will be asked to report.

In many cases we have been able to secure valuable cover for our clients with medical issues.

The protection amount is established based on your business income at the time you apply. The cover does not change if, for example, you choose to take less dividends in future.

Family First is ‘portable’. This means that it can be transferred to a new company you may set up or move to.

If you stop working due to age, health or any other reason, then you can keep the policy in force as a personal policy. This is an important safety net, especially if you have to stop working due to a medical crisis.

In either case, the premiums and sum assured remain the same and you will not have to go through a medical.

The premiums are fixed at the time you take out your policy.

Those premiums will not increase unless you increase the cover.

Your premiums will not increase as you age or if you suffer health problems in future.

However, we recommend that you take advantage of the RPI Indexation option.

This gives you the choice, but not the obligation, to increase the cover each year by the rate of inflation. This means that you will preserve the real value of your protection. In this case, an incremental premium will be added for the extra sum assured. The premium on the initial sum assured never changes.

Your Family First policy will be issued and guaranteed by Royal London Group, the largest Mutual Life Assurance Provider in the UK with over 5.5 million customers.

So, any policy pay-out will come direct from Royal London to your Trust.

Initially, you can cancel the policy within a 30 day ‘cooling off’ period and any premiums paid will be refunded.

In future you can choose to reduce the sum assured or cancel the policy at your own discretion. There will be no penalty or cancellation charges for doing so. You can also increase the cover in future and this may require further medical underwriting at that time.

If you stop paying the premiums protection ceases and there will be no cash payment if you die.

This is not an investment policy and there will be no cash-in-value if you choose to terminate the policy.

Family First is a Relevant Life Policy which is designed to meet the requirements of S393B(4)(b) of the Income Tax (Earnings and Pensions) Act 2003.

The premiums are a deductible expense for Corporation Tax under the ‘wholly and exclusively for the purposes of trade’ rules. To qualify, your company must be a trading company and you must be an employee or Director who is actively involved in your company.

The premiums are paid for by your company but are not a taxable P11D benefit for you personally. This follows from the 2003 Act noted above and S.247 of the 2004 Finance Act. The table below compares Family First to the true cost of paying insurance premiums from net after tax salary.

For a higher rate marginal tax payer…the saving is 53%.

Family First is held in a Relevant Life Trust. Your company will be a Trustee and we recommend that smaller companies appoint an additional Trustee who can be a family member, friend or long term business associate.

Increasingly, we find that clients wish protection beyond the traditional retirement age of 65. In which case, Family First can be taken out to a maximum age of 74.

Because, the funds are going via the Trust, there will be no Inheritance Tax to pay on the distributions from the Trust.

As you probably know, any legacy you leave to a spouse will not be subject to Inheritance Tax in any case. However, the fact the policy is in Trust means that you can choose to leave a legacy to your children or other individuals who would otherwise have to pay Inheritance Tax.

No…never. The policy must be in a Relevant Life Trust in order for you to obtain the tax benefits described above.

Also, the Trust makes 100% sure that the money goes to your family and beneficiaries. The money does not go via your Company, so your Company’s bank or creditors cannot make a claim on it.

We will provide you with the Trust forms.

Yes, the policy pays out to the Trust in the event of your death.

You can advise the Trustees that you wish the funds to be made available to your children when they are at a certain age or for a certain purpose. For example, you might instruct that the cash can only be paid upon their 21st birthday or for the purpose of education or buying a property.

Family & Business Assurance (Services) Ltd is an FCA registered Insurance Intermediary focusing exclusively on protection for Business Owners. Our trading name is “FAB Assurance” and we are based in Charlotte Square, Edinburgh.

We are an insurance advisor and your company will be our client in this relationship. We often work with other advisors and intermediaries who introduce us to their clients as the leading specialists in our field.

Family First is our brand name for a Relevant Life Policy custom designed specifically for Business Owners and Contractors.

So, FAB Assurance is your company’s advisor and your policy will be issued and guaranteed by Royal London Group.

If you have made it to the end of the FAQs then you have asked most of the questions we know of!

If you want to ask more – or clarify what we have said – then please get in touch using the contact button.