Business Owners and Protection

Securing your future

At Entire FS, we work with many business owners and high net worth individuals, who have been making their pension contributions and using their maximum ISA allowances each year. However, we find that one area that could often be better protected is their business.

You might have heard the phrase ‘relevant life insurance.’ This type of assurance plan is available to employers and provides an individual death in service benefit for an employee (including salaried directors). It works as a tax-efficient life insurance policy and is designed to pay a lump sum if the employee dies (or is diagnosed with a terminal illness) whilst employed during the length of the policy. It’s set up by the company and the proceeds go directly to the employee’s family or financial dependants.

But what we find a lot of people don’t realise is that if you’re an individual director, you can get the company to pay for your business insurance as a legitimate business expense. If an integral member of a company dies or has serious ill health issues. it has serious ramifications on the business, so implementing such measures ensures peace of mind for all involved.

We can also arrange shareholder protection, loan protection and key man insurance.

In order to decide who you should protect under key man insurance, consider if there would be significant loss of profit or key financial concern, if that person was not contributing for an extended period of time, for example,

  • a member of staff that has specialised knowledge in your field
  • crucial members of your sales force
  • those that manage important client accounts
  • managers of your company finances or specific legal aspects of your business
  • significant shareholders

The advantages of such plans are often that:

  • they count as a tax-deductible business expense
  • the premiums are paid monthly
  • they offer guaranteed premiums
  • the benefits are usually free from inheritance tax
  • the maximum amount of cover available is £10million

Some things to remember however are that any such relevant life insurance plan or key man insurance must be written into a discretionary trust and there is no cash value at any time.

If you would like to discuss your requirements for business protection with us to make sure you are taking full advantage of the options available, do get in touch – we‘d be delighted to help.

Did you know?

Liability insurers pay out £8.9m every day to protect businesses*
*Source Association British Insurers 2015

…. protecting your entire life

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