Keyman assurance – which is better conforming or non-conforming?
Again there is no right or wrong answer. 1) Conforming A conforming policy means that the premiums are tax deductible to the company, however the proceeds will then be taxable in the event of a claim. 2) Non-conforming A non conforming policy means that the premiums are not deducted from tax, however in this case the proceeds of the policy in the event of a claim will be paid out tax free. In both instances, if the Keyman policy has been correctly structured, implemented and paid, the proceeds of a keyman policy do not form part of the deceased estate, and therefore there will be no estate duty payable on the proceeds provided that absolutely no benefit goes to the deceased’s family. In the event that the business is regarded as a family business, then estate duty will always be payable, as the family is benefiting in some way.
