Critical illness insurance
What is critical illness insurance?
Critical illness insurance is a type of insurance that may be offered in addition to a Life insurance policy if life has an unexpected turn. The policy will pay out if the holder suffers from one of several specified diseases. These payments are similar to life policies in that they usually pay a single claim rather than a regular payment. You should discuss such policies carefully with your broker; being hit by a bus and becoming bedbound may not be on the list of "critically ill" diseases you have been insured for!
Tax-free benefit - but with a catch
The company can pay for the policy and get corporation tax relief on any premiums paid. However, any payout will be treated as salary and subject to PAYE. If you want the company to pay for the policy, make sure that the policy is in the company name.
Check carefully
If you are unsure if your policy will qualify, please ask the provider first. Critical illness insurance is not the same as health insurance, which is always a taxable benefit.
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