Whatever the size of your business, without its people a company’s survival is at risk. Our team of independent advisers can provide their knowledge, expertise and recommendations, to help you consider what cover you need in place to allow continuity, when changes out of your control affect your business and the key persons in your organisation.
Business protection comes with a range of options. There are many types of cover available and most businesses will benefit from expert guidance and advice to make sure they buy suitable, cost-effective cover for their own individual circumstances.
Life Insurance for Company Directors
If you are a director of a limited company a Relevant Life Plan offers an extremely cost-effective way to arrange Life Insurance cover. Not only does it let you protect your loved ones should you pass away, but it also lets you protect your employees.
A Relevant Life Plan taken out by your company could allow you to double your cover at a similar price or halve the cost through tax efficiencies*, compared to having a personal policy.
An employer can arrange individual death-in-service benefits on the life of an employee, including directors. The plan pays a tax-free lump sum benefit payable to the employee’s family if the person covered dies or is diagnosed with a terminal illness, while employed during the term of the policy.
Uniquely tailored to your specific requirements, the cost of these plans to an employer can work out much less than the cost to an employee arranging an equivalent Personal Life policy. All of which is achieved through tax efficiencies, with combined corporation tax and personal tax savings typically ranging from 26% to 50%+ depending on individual circumstances.
Key benefits of a Relevant Life Plan:
- An allowable deduction against your corporation tax bill (saving 19% or more)
- In addition, a personal tax saving compared to dividends (Basic rate payers 8.75%**, Higher rate 33.75%** or Additional rate 39.35%**)
- Non-taxable benefit – no additional personal tax for the employee to pay
- Tax-free pay out to your loved ones completely exempt from inheritance tax
- Enhances your benefit package to reward and attract employees
- Cover all or some of your employees – cover available on an individual person basis
- Optional significant illness cover add-on
- Some policies are transferable, if you sell or close your limited company either into your own name or directly into the new company name. (Limitations can apply i.e. time frames for moving into the new company etc additionally, tax benefits are lost whilst the policy is in a personal name).
Key Person Insurance
Losing a key person from your business through illness or death can have a significant impact on your profitability and ability to trade.
Key person Insurance protects businesses against the loss of profits if an employee becomes terminally or critically ill or dies. Payments from the policy can be used to help the business to recruit a replacement, hire temporary staff and help cover any profit loss.
This cover can be valuable in giving your key stakeholders confidence that your business can still successfully operate if you were unfortunate enough to lose a key person from your company.
A key person can be classed as anyone who is crucial to the day-to-day running of your business and whose skills, experience or knowledge affects revenue. It could be a top salesperson, someone who is critical to delivery of a project or production of goods.
These plans are only available through an independent financial adviser, who can help you to understand all your options before you decide on the right cover for you and your business.
The unexpected loss of a shareholder can be one of the most difficult situations for a business to navigate. Fortunately, Shareholder Protection Insurance can help protect the future of your business by removing any uncertainty about what would happen to the shares of the business, if a shareholder dies or is diagnosed with a critical illness.
A share protection arrangement provides the remaining shareholders with enough funds to purchase the deceased owners share of the business from their estate.
Without such protection in place, the shares often become part of the deceased’s estate which usually goes to the family. This means the family now has control over the shares and what to do with them. In some cases, this can result in a potentially inexperienced family member having influence over the business, or they may simply just sell the shares to the highest bidder.
A Shareholder Protection Policy gives peace of mind to the shareholders that the business can continue to operate without significant disruption. It also gives the deceased’s family a cash lump sum which is often more useful to them than a business they have little interest in.
Executive Income Protection
If a member of your staff is unable to work due to an accident or sickness, it can be very costly for the business to cover the employees sick pay, particularly when they are not generating any income for the business.
This protection cover pays a monthly benefit to the business which can be used to fund the employee’s sick pay. As an employer this means you are not leaving your employee to rely on savings or state benefit, to fund their living expenses while off from work.
There are a range of options and additions available for this type of cover which can include covering the employee’s earnings, employee’s pension contributions, employer’s National Insurance (NI) contributions, dividends and P11D benefits.
Cover can be limited to 12, 24 months or retirement age and can involve a deferred period where the period doesn’t start for a set number of months which naturally reduces the cost of the cover.
Business Loan Protection
Many businesses rely on loans to support their finances as they grow and develop which must be re-paid, even if the company’s profits are impacted by unexpected events. If you lost a key employee to death or critical or terminal illness, this could affect your profits and the ability for you to make loan repayments.
Business Loan Protection can give your company the ability to pay outstanding loans, commercial mortgages and overdrafts should you lose a key employee.
Cover can be taken out on a level of decreasing cover. Having this cover in place can give key stakeholders greater confidence in planning its financial future.
Find out more
You’ve probably got many questions you need answering.
Our team of experienced, independent and friendly advisers will work to understand your business to allow them to make appropriate recommendations, using the most cost-effective solutions to ensure your business is fully protected, should the worst happen.
*Figures are for illustrative purposes only and depend on individual circumstances.** Tax rates for 2022/23