Business Protection Life Insurance - What is it all about ?
You have probably insured your Stock, Building Premises, Vehicles & also have Public Liability etc.
Business Protection Life Insurances - Summary
> What if a Key Director or Executive were to die or be critically ill ? How would your business survive?
Tax Relief on Premiums ...Is that a Relevant Business Life Insurance Policy ?
A Relevant Life Policy is a single life death in service (DIS) plan paid for by the employer on the life of an employee [ this can include 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 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.
KEY PERSON INSURANCE COVER
Keyman Insurance [otherwise known as Key Person Insurance, Key Man Insurance, Key Personnel Insurance policies] is 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 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.
What else should be considered in working out Key Man Insurance ?
* Proportion of Business Profits - Take into account the keyperson's salary, annual profit or the time it could take to replace them.
Click here to obtain Keyman advice and quotations.
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 partners / 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
EXECUTIVE INCOME PROTECTION
Executive Income Protection or Key Person Income Protection helps provide a payment to the Company that allows the employer to provide a % of their salary in the event of long term illness or accident. This sum is payable for as long as it takes to return to work or plan end. Dependant on the type of cover, this maybe payable to that individual or to the Company to help source new staff until that person returns to work.
This website is intended for UK consumers & any information contained therein is for Generic Guidance only and is not to be construed as advice. For protection products we usually offer from a range of providers.
By completing our no obligation quotation request form, you may be provided in seconds with comparison protection quotes, key facts from leading Providers - based just on the basic information you have provided. Note: These quotes will not take account of any personal, health or lifestyle issues. You also consent for us to then kindly contact you by phone - where we may offer Professional Broker help & guidance if needed. We may as appropriate then help to arrange a suitable protection policy based upon your own circumstances & needs after a further review by "advice & recommendation". This will usually be on a non face to face basis.
For products with an investment element we will introduce you to an authorised adviser. We act as introducers for Accident, Sickness and Unemployment plans. We may also introduce you to other selected professional partners for other protection or legal products as deemed appropriate. Online Dispute Resolution (ODR) - https://webgate.ec.europa.eu/odr/main/index.cfm?event=main.home.chooseLanguage. Financial Ombudsman. https://www.financial-ombudsman.org.uk We nominate to fundraise for Great Ormond Street Hospital Charity.
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