As your business develops and grows, it is worth considering the different types of personal and business insurance that can give you peace of mind that should anything untoward happen, then you and your business are protected.
Here is a whistle-stop tour of the kinds of protections available for you and your business, broken down into three broad categories:
- Personal protection insurance
- Business protection
- Small & Medium Sized Enterprises (SME) protection
PERSONAL PROTECTION INSURANCE
Relevant Life
- This is a life assurance plan which can include critical illness, that provides benefits for employees and directors of a business
- It is established and paid for by the company, and provides a significant tax saving particularly for higher and additional rate tax payers – as contributions will not be treated as a benefit in kind so will not be taxable on the life assured for whom the plan has been established
Executive Income Protection
- This is designed for small/medium size businesses looking to offer selected employees the benefits of an extended sick pay arrangement
- In the event of injury or illness that leads to loss of earnings, the plan pays a regular monthly benefit that can be passed on to the employee to help them meet their financial commitments, without having to rely solely on state benefits
- In the event of a claim, the benefit is payable to the company to be distributed to the life insured and at this point tax is incurred
BUSINESS PROTECTION
Key Person Insurance
- A Key Person is an individual whose absence from the business will have a significant financial impact on the business – this can include a self-employed contractor
- It may be that they contribute directly to the profits of the company or Partnership if, say, they possess valuable knowledge and expertise that is key to developing the business or retaining clients. They might also be an individual who has enabled the business to secure lending, or have themselves lent money that will need to be repaid
- Key Person Insurance aims to protect a business from the financial effects of losing a key individual, where they are key to securing business or have specialist knowledge the business relies on, or to meet the cost of any outstanding business loans
- When determining the level of cover, it is important that this is representative of the financial loss that would be incurred and is typically based on a Multiple of Salary, Cashflow replacement or Capital Losses
Shareholders Agreements
- This aims to enable a business to be retained by its existing ownership, should a partner or shareholder die or need to sell their share after being diagnosed with a critical Illness
- This kind of succession planning in the event of an owner dying or being diagnosed with a critical Illness is about providing a financial and legal infrastructure which enables the share of the business of the person affected to pass efficiently to the remaining owners, whilst ensuring that they or their family are compensated financially
- How a business is valued for succession planning purposes will differ depending on its legal structure. i.e. companies are valued differently from Partnerships
SME PROTECTION
- Group Protection Policies, such as Group Life, Group Income Protection and Group Private Medical Insurance can provide you and your employees with a variety of benefits
- It is generally a more cost effective way of providing these benefits compared to individual policies as the premiums paid for these policies are classed as a business expenses and so are more tax efficient
Through the wealth management arm of our company, we can help put the right protection in place for you and your business to give you that all-important peace of mind. Please contact us and we can get the process moving forward for you.
