Business protection safeguards your company if a director, shareholder, partner, or key employee becomes ill or dies. It helps your business recover quickly and reduces the impact of such events. Here are the main types of business protection:
Executive Income Protection
An Executive Income Protection plan is designed to pay the company a monthly benefit in the event of a valid claim.
Like a personal income protection plan, Executive Income protection is an insurance cover which pays a benefit if an employee is unable to work due to an injury or becomes unwell. The insurer provides a monthly benefit to the business, which protects a percentage of an employee’s income, usually up to 80% along with, if required, an additional amount to cater for national insurance contributions and pension payments.
A real positive for the employee is that Executive Income protection is not classed as a benefit in kind, meaning it will not make up part of a P11D, resulting in no personal tax implications. Cover can be arranged against salary plus any dividends.
Relevant Life Insurance
Would you like to arrange life insurance through your company for you or your employees?
Then a relevant life cover plan could be the answer, and a cost effective one at that.
This cover pays a cash lump sum to an employee’s family if they die or are diagnosed with a terminal illness. This employee benefit is not classed as a benefit in kind, meaning it will not make up part of a P11D, resulting in no personal tax implications.
This plan counts towards business expenses. Cover can be arranged against a multiple of income acting as renumeration for dependants of the life insured.
Whether you’re a company Director or employee requiring a death-in-service perk, a relevant life insurance plan can offer your family with a solution to ongoing financial resilience, giving that all important peace of mind. We will write all plans into Trusts, which in turn can help manage future inheritance tax liability.
To confirm, we are not tax advisers and would encourage you speak to a tax specialist or your accountant for advice in this area.
Key Person Protection
If a key employee gets sick then this impact can filter through your business.
Key person cover protects an employee should they be diagnosed with a critical illness, disability or die, by providing the company with a cash sum.
It’s important to ask yourself the question, what would the future look like if a director, shareholder or key employee be diagnosed or die?
The amount paid can be used to recruit a new replacement, cover a salary or bridge a gap of profit loss short term until your company can recover from impact.
Shareholder Protection
The sudden loss of a shareholder through diagnosis of a critical illness or death, can certainly disrupt a company.
Shareholder protection offers an answer to minimise this impact to the business.
The cover amount can help buy shares from an existing shareholder, which in turn enables other shareholders to retain full control of the company. Subject to having a cross-option agreement in place other shareholder can insist a beneficiary sells these shares, enabling them to retain full control. Alternatively, if an external beneficiary inherits shares from a deceased shareholder, they can also insist other shareholders purchase these shares from them which contractually must happen. The cover amount can be calculated based upon the value of each owner’s share in the business.
Business Loan Protection
This insurance cover can help businesses pay an outstanding loan should a key employee die or if they're diagnosed with a specified critical illness.
When a company arranges business loan protection, the cover sum reflects the amount a business owes in borrowed money. This can ensure that in the event of a claim, they have sufficient cover in place to repay any business loans.
There can be serious implications for businesses that are unable to pay back loans, so business loan protection can help give business owners peace of mind for them and their families, especially when a personal guarantee was signed.
