Business protection can help businesses continue to trade if a key person or business owner were to die, become terminally or critically ill. The policy could help ensure key individuals within the company are replaced, any business debt is protected and shares from the deceased key person’s estate are bought.
There are 4 main types of business protection. These are –
Relevant Life is a life insurance policy. It is available to employers and provides a tax efficient way for smaller businesses to offer death in service benefits for an employee which can include a salaried director. This type of policy is tax efficient as it is paid by the employer and can count as a tax deductible business expense. Unlike a group scheme, a relevant life policy is arranged on an individual basis with the employer as the policy owner and the employee as the individual insured. The premiums are guaranteed from the outset and the policy must be written into a discretionary trust which means the benefits are usually free from inheritance tax.
Key Person Protection
Key Person Protection is designed to pay out a lump sum on the death or diagnosis of a critical illness of a key employee or partner. People are often a company’s biggest asset and losing a key person can be extremely damaging to the business. Key persons to a business can include owners, directors, sales managers or individuals with specialist skills. This type of plan is owned and paid for by the business.
Share Protection is a life insurance policy taken out on the lives of partners or shareholders to ensure that a lump sum is available on the death of a shareholder. It will then enable the surviving partners or directors to buy the deceased’s shareholding from their estate. This can mean the remaining partner will not have to conduct business with the family of the deceased that may have little knowledge of the business. Quite often the family would prefer to be compensated.
Business Loan Protection
Business Loan Protection is designed to cover any loans which are outstanding. Often the ability to repay will often rest with a few key people. Therefore it is important for businesses to make sure they have insurance in place to pay an outstanding loan if something were to happen to these people. Quite often lenders will make an insurance policy a condition of the loan arrangement and the insurance is usually a decreasing term insurance plan.
To give you financial peace of mind when you need it most.