COMPANY DIRECTORS LIFE INSURANCE - What is it all about ?
You have probably insured your Stock, Building Premises, Vehicles & also have Public Liability etc. Yes, they may all be important Assets but what about the People who work there - your Key Personnel ?
> What if a Company Director or Key Person were to die or be critically ill ? How would your business survive?
Tax Relief on Premiums ...Is that a Company Directors Relevant Life Insurance Policy ?
A Relevant Life Insurance Policy is a single life death in service (DIS) plan paid for by the employer on the life of an employee [ this can include Company Directors paying tax under PAYE ]. Unlike some group DIS schemes there is no minimum number of members, making this ideal for small businesses. Relevant Life Policies also do not count towards an Individual's annual or lifetime allowance.
Subject to the "wholly & exclusively rules" Relevant Life Insurance plans are an allowable deduction for business against corporation tax, but they are not treated as a benefit in kind. This results in no NI liability for employer or employee plus no income tax liability for the employee on the payments into or any sum assured paid out under this tax efficient plan.
Example: XYZ Ltd takes out a relevant life cover policy for £200pm on Mr Jones the Company Director providing lifecover for his loved ones. They pay no income tax, or NI on this £200pm but can claim 20% corporation tax as an allowable deduction of £40pm = net cost £160pm.
COMPANY DIRECTORS & LIFE ASSURANCE COVER
An insurance designed to help compensate a business for the financial loss on the death, long term sickness or serious critical illness for example; cancer, heart attack, stroke, diabetes - of a company director or key person. On any events as just specified, a lump sum or income may become payable to the business to use to compensate for the loss of that key person. Other factors -
* The cost of training or recruiting replacement staff.
COMPANY DIRECTORS LIFECOVER - SHAREHOLDER PROTECTION
Shareholder Protection or Share Protection helps provides Insurance for the financial loss on the death, long term sickness or critical illness thence retirement to give the remaining directors a lump sum to purchase the shareholding from that shareholder or the deceased's estate. A suitable Shareholder Insurance policy effected alongside a legal partnership / share agreement could help prevent the following issues:
* A shareholding may force a change in the balance of control of a Company.
Business Trusts & Legal Agreements
Legal Agreements - Business protection policies should be written to reflect the requirements of the partnership / shareholder / key person agreement. Whilst we are unable to provide specific legal advice we can give generic information regarding the typical agreements used.
Double or Cross Option Agreement
Both parties enter into an agreement where, if the surviving shareholders exercise the option to buy, then the deceased's estate must sell. If the deceased's estate exercise the option to sell, then the surviving shareholders must buy.
Single Option Agreement
Applicable in the advent of Critical Illness or Total Disbility, an option compelling the other shareholder's to buy their shares.
Buy & Sell Agreement
On death the estate is obliged to sell. The surviving partners are therefore obliged to buy.
Life Insurance Trusts
Policy is set up by Trustees in a Trust to ensure policy proceeds get payable for the benefit of other parties
A Policy is set up to ensure that the plan proceeds get directly payable for the benefit of other parties not oneself
Company Directors Life Insurance Quote