Premium key person insurance solutions: Key Person Life Insurance: How would your business cope with the loss of a key person? We help protect your business from the death of its key people. Shareholder Protection Insurance: The death of illness of a minor or major shareholder can lead to massive business problems. Help give shareholder dependents a fair sale price of shares and help remaining shareholders retain the business shared with these important policies. Read additional information on Executive Income Protection.
Who can have Key Person Insurance: Any business looking to protect their business from, life cover, terminal illness, critical illness cover (covering illnesses such as heart attack, stroke, cancer). As will as the typical limited company businesses key person cover can benefit sole traders and partnerships. As mentioned above it is important to get the right level of cover, set up in the most tax efficient manner to give peace of mind, protect the business profits and reduce business risk from the loss of a valuable employee. It gives a much needed cash injection to give cash flow by means of a lump sum payment.
When a business loan is taken out, it must be done so with the understanding that there will be a responsible party for paying back the money borrowed. Business loan protection insurance is usually taken out on the individual or group of individuals responsible for repayment of the loan. The purpose of this type of insurance is to provide a level of security and assurance should something unexpected happen to one or more of the shareholders involved in the loan. This could include death, disability, or critical illness – all of which might otherwise leave the company in financial difficulty.
How the policies should be set up: There are various ways in which shareholder protection can be taken out and set up. We work closely with your accountant and other professional connections to ensure the cover is setup in the correct way for your business. In order to protect individual shareholders, it is recommended that each shareholder takes out a separate “own life” policy. This policy will insure them for a sum assured equivalent to the value of their company shares. By taking out this coverage, the shareholder can rest assured knowing that if something were to happen, their investment in the company would be protected. Additionally, if they choose to write this policy into trust, they can benefit their co-shareholders in case of unforeseeable events.
Tax Implications: This form of succession planning is quite complex and you should seek financial advice, legal advice, tax advice and bespoke advice unique to your own situation so the guidelines below will just give a brief overview of what company owners need to watch out for. So it will be very likely that the spouse could not sell the shares at all or sell them at a massively discounted price. With a shareholder protection policy in place it would provide a lump sum payment to the remaining shareholders. The sum assured would be pre-agreed by the business owners. This would allow the individual shareholders to buy the spouses company shares at fair price.
Why have Business Loan Insurance? For businesses, protecting their investments is paramount. Taking out a loan to either begin or expand a business venture brings with it a heightened level of risk, because the ability to repay the loan often rests on the performance and health of only a few key staff members. To help manage this risk, it is essential that any significant loans taken out by businesses are protected with insurance.
Who are the Key Persons of Business? The concept of a key person is essential for any business. A key person is someone whose skills, knowledge, experience or leadership are vitally important to the long-term financial success of a company. Examples include company directors, sales directors, IT specialists and managing directors. Companies normally have several key people within their organization who provide expertise in various areas and drive development. Moreover, these individuals are very hard to replace and should something happen to one of them it could potentially cause major financial strain on the business. See extra information on https://advice4directors.co.uk/.