Business Insurance can be split into different options; Relevant Life Insurance, Key Person Insurance and Shareholder Protection.
How do you know which is right for you?
Relevant Life Insurance
Relevant Life insurance is an individual death in service policy that can allow an employer to provide tax efficient life cover for employees, including Ltd Company Directors.
Under a relevant life plan the applicant can choose to have life cover only or life and critical illness cover. Life cover pays out a lump sum if the life covered dies during the policy term, life and critical illness cover pays out if, during the term, the life covered dies or is diagnosed with a critical illness which meets the providers policy definition. In both cases Terminal Illness insurance is also normally included and again pays out should the person covered be diagnosed with a terminal illness during the policy term, subject to the provider’s policy criteria.
Relevant Life plans work as a tax efficient method of arranging protection, there is no National Insurance contributions on premiums and the premiums benefit from corporation tax relief. Benefits aren’t taxed as a benefit in kind (BIK), there is no Capital Gains Tax (CGT), benefits are not included in the person covered estate for inheritance tax liability and benefits do not count towards annual or lifetime allowance tax benefits.
These reasons make relevant life plans a much-utilised form of protection for Owner/Director Limited Companies, small businesses, group life insurance schemes and high earning employees.
If you would like to know more about the potential options available to you and your employees please give us a call now to discuss your enquiry in more detail on 01244 478780.
Key Person Insurance
When a Key Person within a business dies it can have a devastating financial effect on the business. You can help safeguard your business against the death, terminal or critical illness of a key person with Key Person protection.
In simple terms Key Person Protection (also known as Key Man Insurance) is a business insuring itself against the loss of a critically important member of staff. The protection can be arranged to provide life insurance and/or critical illness protection should the person covered suffer from a specified critical illness during the lifetime of the policy. It will also pay out if the person is diagnosed with a terminal illness and meets the provider’s definition, normally only restricted should the occurrence happen within the last 12 months of the policy.
The policy itself is owned for and paid for by the Employer, so any pay out during the lifetime of the policy is paid to the employer. The proceeds of any claim would be paid as a lump sum and could significantly help the business recover, with the funds used to replace lost revenue or assist in finding and hiring a replacement employee.
If you think your business could benefit from this type of protection please contact us directly to discuss the options in more detail on 01244 478780.
If a shareholder in your private limited company, member of your Limited Liability Partnership (LLP) or partner in your partnership were to die, could you afford to purchase their share of the business? If the answer is no, there could be significant implications for the future of your business.
Shareholder Protection can help you protect the ownership of your business in this situation.
What is It?
Shareholder protection allows the remaining partners, shareholding directors or members to remain in control of the business following the death of a business owner
How does it work?
In the event of a business owner dying, being diagnosed with a terminal or specified critical illness, share protection can provide a lump sum to the remaining business owners. This means in the event of a valid claim the remaining business owners could use the lump sum to help purchase the deceased or critically ill partners/shareholding directors/members interest in the business.
Why have it?
If a business owner dies with no share protection in place his or her share in the business may pass to a member of his or her family. This means the surviving business owners could lose control of a proportion or, in some circumstances, a controlling interest in their business. The family member my then choose to become involved in the ongoing running of the business or could even decide to sell their share of the business to a competitor. A share protection policy will help avoid these issues.
Imagine, if your business partner dies can you safely say you’d be happy potentially having their spouse, son or daughter as your new business partner? What is their experience in your field of business?
In a recent survey by one of the UK’s leading providers of shareholder protection it became apparent 37% of businesses do not have any shareholder protection in place. Are you included in that 37%?