Business Protection
Business protection can help ensure the long term financial health of the business during challenging times.
What is Business Protection?
Protect the most valuable asset in your business – your people
Shareholder Protection
Shareholder protection helps ensure that if a shareholder dies or becomes seriously ill, the remaining owners can retain control of the business while the affected shareholder’s family receives fair financial compensation.
Key Person Insurance
Key person insurance provides a financial safety net to help your business cope with the loss or serious illness of a crucial employee, supporting continuity during a challenging time.
Relevant Life Insurance
Relevant life insurance offers a tax-efficient way for businesses to provide life cover for employees or directors, giving their families financial protection if the worst happens.
Executive Income Protection
Executive income protection helps ensure that key employees or directors continue to receive an income if they’re unable to work due to illness or injury, reducing financial strain on both the individual and the business.
Business Protection FAQs
More about Shareholder & Partnership Protection
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
To discuss your requirements and the options available, book a call (no obligation) to speak to one of our team.