Do I need to protect my business?
When you set up your business you have a plan in place of the objectives you want to achieve and how you are going to achieve them. You may be a key member of staff and therefore be responsible for the day to day operations and financial profits of your business.
We will review the key areas of your business along with the key members of staff responsible for them and we will help you to make sure that in the event of critical illness or premature death to a key staff member, your business would not suffer a financial loss and it would continue to trade.
KEYMAN/PERSON INSURANCE
There are several types of key person policies that cover different situations. Some cover the death or critical illness of a key staff member and others cover the death of a significant shareholder in the organisation.
Pay-outs are typically designed to cover re-organisation costs, repay outstanding financing, pay staff recruitment and training costs as well as purchase shares from the estate of a deceased shareholder.
Policies can also include accident and sickness protection that pays a benefit if a key person is absent for a prolonged period due to illness or an accident.
RELEVANT LIFE INSURANCE
Relevant life is a life insurance policy available to employers to provide an individual death-in-service benefit for an employee. It can help smaller businesses attract and retain high-calibre staff by offering them attractive benefits packages that are also tax efficient. It can also be a tax-efficient way for shareholder directors to take out life insurance although this should not be used for business succession planning.
BUSINESS LOAN PROTECTION
This type of cover is designed to cover any loans or finance the business has taken out over time, such as a mortgage on the property you trade from or a loan you have taken out for machinery or stock etc. Terminal Illness cover is usually included which means the insurance company pays the benefit out upon diagnosis of a specified terminal illness where the policyholder is expected to die within 12 months.
SHAREHOLDER PROTECTION
This type of plan is designed to help ensure that if a shareholder, Director or Partner were to die, the business would have enough money to buy the shares back from the beneficiaries under a pre-written agreement. The benefit of having this type of plan in place is to avoid jeopardising the business financially when buying back shares from the deceased estate and to protect the business against the possibility of the shares being sold to a competitor or outside the business as a result of there being a lack of funds to do so.
