BUSINESS PROTECTION LONDON
With many businesses reliant on key people within their organisation to ensure the business is operating successfully, the need for business protection insurance can be critical to provide a financial safety net.
Business protection insurance is one of the best ways to safeguard the future of businesses and companies, by protecting the people who matter most to your business success.
It is often the case where we do not consider taking out business protection as many people may not consider it as a necessity. This is a vital mistake. Business Protection Insurance is a way to protect your business and can act as a safety net. When going into a business, it is important to ascertain what type of insurance you will require and factor this into your budgeting.
If you are uncertain of this, feel free to call one of our qualified advisors to discuss your requirements.
Different Types of Business Protection Insurance
- Director/shareholder protection
- Key Person Insurance
- Business loan protection
- Partnership protection
- Sole trader protection
Why Business Protection Insurance?
We can never predict what is around the corner and for this reason, ensuring our businesses are fully protected can help avoid the many pitfalls and the unexpected.
With Business Protection, you’re giving your company an extra degree of long-term stability and reassurance, by protection for a key person or key employee/s, should something ever happen to them – or you if you are a Director/ Shareholder.
By being fully covered you can:
- Ensure your business continues to trade
- Afford to replace key individuals in your company
- Buy the shares of an individual who has become critically ill or deceased died
- Protect yourself from corporate debts
Types of Business Protection Insurance
Key Person Cover
How does Key Person Protection help?
With many small and medium sized businesses, dependent on a key person/ key people, Key Person Protection Insurance is designed to help give your business protection in the event of death, critical illness or terminal illness of one or more key employees.
If the key person suffering with ill health is also the owner of the business, this could also put additional financial strain of the business and remaining owners of the business.
If such an event happens, the plan pays out a lump sum to cover any loss in revenue or profits – helping to keep your business on track.
The critical illness element is an add on to the life cover element for death and/ terminal illness, and provides protection for your business against the financial impact of a key person who suffers a critical illness during employment.
Partnership Protection and Shareholder Protection Insurance
If a business owner or shareholding director dies or suffers a terminal illness, their share of the business usually passes to their beneficiaries.
To regain control of that share, the other shareholders/ business partners may need to buy that individual’s part of the business. Many businesses don’t have the money to do this and it can be costly to borrow.
This may also be the case if a critically ill shareholder/partner was no longer able to run or be part of the business.
How does Shareholder Protection and Partnership Protection help?
A lump sum is paid out if a business owner/ shareholder dies, suffers a terminal or critical illness. This type of business protection insurance provides access to funds to enable the continuing shareholders/ business owners to buy that individual’s share of the business – allowing them to keep control.
Business Loan Protection
Business loan protection will cover your company’s financial stability in times of uncertainty.
If a business owner dies or suffers a terminal illness, lenders may have the right to demand that any outstanding loans are paid back. These could be difficult to pay off at short notice.
How does Business Loan Protection help?
In the event you lose a business partner, you may want or need to repay outstanding business loans, some of which may have personal guarantees or have to be repaid when someone dies.
Having a business protection insurance providing cover for this will support the financial stability of the business by paying a lump sum in order to repay your debts.
Relevant Life
Who can have a relevant life policy within your business?
- Company Directors
- Key Employees
- High Earners
Things to know about Relevant Life Plans
If an employee leaves who is covered, they are able to have their plan taken over by a new employer during any time over the plan term or replace with a personal protection plan.
Employees must be between 17 and 70, and resident in the UK.
Sum assured limits – there’s no upper limit, provided the cover is justifiable – typically 25 times remuneration (dependent on age).
Benefits of Relevant Life Policies
For Employers/ Company Owners
- Tax Efficiency - this is a tax deductible expense with no National Insurance Contributions
- A great employee benefits to offer employees
For Employees
- No National Insurance contributions paid
- Cash lump sum payment for terminal illness and death
Trusts
What is a Trust?
What are the benefits of putting a plan into Trust?
- When a Plan is held in a valid trust, it’s not subject to Inheritance Tax (IHT) as part of the settlor’s taxable estate.
- The plan proceeds are paid directly to the Trustees, meaning faster payment of the benefits to the beneficiaries.
How can a Trust be used with a Relevant Life Plan?
In order for the business and employees to benefit from the tax benefits associated with a Relevant Life Plan, it should be put into a Discretionary Trust. The owner of the Trust is the business and the life assured is the employee.
All employees are eligible (including shareholding directors of limited companies). However, business owners such as sole traders, equity partners, or LLP members are not eligible.
How do I know what business protection I need?
Here at London-FS, we have expert advisers who will be able to look at your business in detail, and identify your business protection needs.
We are a firm regulated by the Financial Conduct Authority, and you can be rest assured your adviser will be able to provide you with advice based on your individual company needs.
Our Autumn 2024 Budget Breakdown
Autumn Budget 2024: Key Tax Changes and Their Implications for the Real Estate
Navigating Commercial Investment Finance: A Comprehensive Guide to Buying Commercial Property in the UK
Investing in commercial property can be a rewarding venture, offering potential for substantial
