Business protection
We work out what the business would need if a director or owner died or fell seriously ill, and arrange cover that pays it.
We work out what the business would need if a director or owner died or fell seriously ill, and arrange cover that pays it.
Key person cover and shareholder protection pay the business, or the other shareholders, when a director or owner dies or is seriously ill.
Business protection is what keeps a company trading when the owner, a director or the one person who knows how everything works is suddenly not there.
It is often missed because the accountant, the adviser and the solicitor each assume another has raised it, and the shareholders' agreement may not have been looked at since it was drafted.
Who owns the policy, who pays for it and who receives the money all carry tax consequences, and they are different for key person cover and share protection. If they are not decided at the start, a claim can trigger a corporation tax charge, an inheritance tax problem, or a payment to the wrong person.
We work with your accountant so that the legal agreements and the policies say the same thing. If you already have a shareholders' agreement, bring it to the first meeting.
Common approaches are a multiple of the person's salary, their contribution to gross profit, or the cost of recruiting and getting a replacement up to speed. We work through which best reflects the actual exposure in your business.
Sometimes, and it depends on the purpose of the policy and who benefits. Broadly, key person cover taken purely to protect profits may attract relief, while cover protecting a capital asset or a shareholding generally does not. We will confirm the position with your accountant before you commit.
The agreement sets out what has to happen. Share protection provides the money to do it, because an agreement obliging the surviving shareholders to buy only works if they can pay. You need both, and they need to be consistent with each other.
Cover can be arranged to pay on a specified critical illness diagnosis as well as on death, if it is chosen at the outset and at additional cost.
A relevant life premium paid by your company, against the company profit needed to pay the same premium yourself from a dividend or a salary.
Work it out →Eight questions on retirement, protection, savings, your mortgage, your estate and your day-to-day money give a first score. The other 17 complete the written report.
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Independent Financial Adviser
Independent Financial Adviser
Your first call is with an Account Manager and is at no cost to you. Tell us what is on your mind: a pension you have lost track of, a fixed rate ending, a will you keep meaning to write.