Business protection can help ensure the long term financial health of the business during challenging times.
Protect the most valuable asset in your business – your people
Helps business owners keep control of their company if one of them dies or is diagnosed with a critical illness.
Provides a financial safety net if a key profit earner of the business dies or is diagnosed with a critical illness.
Relevant Life Insurance
A tax-efficient way for small businesses looking to offer death-in-service benefits to employees and salaried directors.
Executive Income Protection
Designed for SME businesses to offer selected employees the benefits of an extended sick pay arrangement.
Protecting businesses from the loss of a key person
Key Person Insurance provides a safety net for a business in the event of losing a key person, through death or if they are diagnosed with a serious illness. The claim is paid back to the company or partners, helping reduce disruption to the business and continue as normally as possible.
A ‘key person’ is any member of staff who has a direct impact on the business’ profits. It could be the business owner, director, salesperson or any employee with specialist skills or expertise.
- Protects against loss of revenue and profits
- Supports the cost of recruiting new staff to replace the skills lost
- Maintains client and supplier confidence
- Gives the business time to make the right choices
Key Person insurance provides the funds to support the business through challenging times and will help return the business to the state it was in before the loss of the key person.
Protecting your employees and their families
Relevant Life Cover is a tax-efficient life insurance policy, allowing companies to offer a death-in-service benefit to their employees. It’s set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) of the employee insured. The proceeds go directly to the employee’s family or financial dependants.
- Benefits are usually free from inheritance tax.
- Designed for small and medium-sized businesses (SMEs).
- Counts as a tax-deductible business expense.
- Is often cheaper than a personal life insurance plan.
Enables business owners to make a large saving on the cost of their own life insurance, as opposed to buying personal cover themselves from their taxed income.
A relevant life plan is a personal life insurance policy that can be treated as an allowable business expense, so the business would qualify for corporation tax relief. There’s no additional income tax or national insurance to pay
Executive Income Protection
Protecting businesses when an employee can’t work
Executive Income Protection is designed for small to medium-size businesses looking to offer an extended sick pay arrangement. The plan pays a regular monthly benefit to the employer that can be passed on to the employee, to help with meeting the monthly bills, in the event of injury or illness that leads to loss of earnings.
- Premiums tax-deductible
- No P11D benefit for an employee
- Flexible use of payments
- More tax efficient than personal Income Protection cover for the employee
- Covers up to 80% of the employee’s earnings plus the employer’s National Insurance and pension contributions.
Many policies include additional benefits such as, Wellbeing and Rehabilitation services, providing the employee with back to work support.
Business Protection FAQs
Potentially, a normal shareholder protection scheme can function as long as two shareholding directors are involved. However, it is designed to be a reciprocal arrangement with all shareholders (or partners) taking part.
The amount of cover is set at the beginning of the cover and the company value at claim stage would not normally affect this amount. For this reason, our advisers will regularly review the level of cover in place and encourage business owners to take action if required.
Premium equalisation ensures that all participants in a Share or Partnership Protection arrangement pay a commercial amount relative to the benefit they or their family is likely to receive. Premium equalisation is a required part of any Share or Partnership Protection arrangement.
More about Key Person
A key-person is an individual who is vital to the success of a business. The loss of a key person’s specialist expertise or skills could severely impact the business. It could be the company owner, director, salesperson or any employee who would be difficult and costly to replace.
Key Person insurance is often referred to as Key Man Insurance.
Key Person Insurance is life insurance with the option to include critical illness cover. It is designed to protect a business against loss of profit on the death of a key person, or to pay a debt or loan where repayments would be affected by the loss of a key person.
This should be based on the level of profit that is expected to be lost if this person died or suffered a critical illness.
Our advisers are able to help you calculate the level of cover you need.
This depends on the trading style of the firm setting up the policy.
For limited companies and limited liability partnerships, the firm would typically be the applicant and would own the policy and pay the premiums.
For partnerships, one of the partners would typically own the policy with any proceeds paid via a trust to all the partners.
Unfortunately, the tax treatment of Key Person Cover premiums and proceeds is not straight forward. In some cases, the premiums will be treated as an allowable expense and any subsequent proceeds are likely to be treated as a trading receipt. If however the premiums are not treated as an allowable expense it does not automatically follow that any proceeds will not be considered a trading receipt. We can talk you through the detail.
More about Relevant Life Insurance
Yes, cover is available for all employees, as long as the business pays them a salary.
No, Relevant Life Cover is only available for employers to insure and cover their employees.
No. You will need a separate critical illness plan.
There are a number of different options available, the most common is that many providers can give the old employee a new own life insurance policy on the same terms as the existing contract, without the need for further underwriting.
Most policies will pay the full amount of cover if the employee is diagnosed with a terminal illness and given less than 12 months to live. Most providers won’t pay a claim for terminal illness if the policyholder is diagnosed with a terminal illness within 12 months of the end date of the policy.
More about Executive Income Protection
With many providers, you can choose any amount up to 80% of annual earnings. Earnings mean the combined value of gross income paid through PAYE and the taxable value of selected non-cash benefits received as benefits in kind in the 12 months before the employee became incapacitated. Shareholding directors can take account of the dividends they receive from the company.
You can choose the age at which cover for your employee will stop – often this is known as the plan expiry date. This can be any age up to their 70th birthday. The minimum plan term is typically 5 years.
Benefit payments start after your employee has been unable to work for an agreed period of time because of sickness or injury.
The deferred period options are typically 4, 8, 13, 26 or 52 weeks.
When setting up the plan you can choose how long you wish the benefits to be paid for, this is normally to a policy expiry date you have selected (such as an expected retirement age) or for a limited payment period of 2, 3 or 5 years. Benefit payments will stop earlier if the employee reaches the plan expiry date during the payment period.
Experience you can trust
Speak to us to discuss your requirements and the options available, book a call (no obligation) to speak to one of our advisers here.