A Safety Net for Your Business and Lifestyle
Running any business brings with it an element of risk. However, the death or critical illness of key personnel can amplify the impact. Mitigating the risks makes good business sense by planning for what’s in your control.
BUSINESS PROTECTION
RELEVANT
LIFE INSURANCE
A tax efficient way for small businesses to provide death in service benefits to their employees, showing them their worth. This cover is ideal when you are a business owner that doesn’t have a large workforce, or a sole trader set up under PAYE.
Premiums are paid by the employer and in the event of death or diagnosis of a terminal illness the policy pays the beneficiaries.
EXECUTIVE
INCOME
PROTECTION
A tax efficient way to provide income protection, where premiums are paid by the business, there is no benefit in kind liability and premiums can be offset. This cover is ideal when you are self-employed or a small-medium sized business looking to offer selected employee’s additional benefits.
Pays out should the executive be unable to carry out their duties for any reason including them having sustained a serious injury or being diagnosed with a threatening illness. The pay-out can be used as needed by the executive.
KEY PERSON
COVER
How would your small or medium size business survive if an important employee dies?
This cover is ideal when you are a business that wants to protect any staff member (including Directors) with specialist skills or expertise who the business is highly dependent on. Pays out either a regular income if the key person is unable to work or a lump sum if they die or are diagnosed with a terminal illness.
SHAREHOLDER /
PARTNERSHIP
PROTECTION
What would happen if your business partner or a shareholder died or had a severe illness? Who would inherit the company shares and what impact might that have in the future?
This cover is ideal when the owners of limited company’s or partners of an LLP that want to keep control of their business whilst ensuring fair treatment of the family of the affected shareholder. A policy is placed in trust and a written contract is entered into by each shareholder / partner. The policy pays out a lump sum to the business that will allow to purchase the deceased shareholders shares.
BUSINESS LOAN
INSURANCE
How would the company continue to pay for any business loans or debts in the event a key person or loan guarantor passed away?
This cover is ideal when you are planning for the financial stability and effective future operation of the business in the event an important person has been lost. Provides a cash lump sum to pay off outstanding business debts should the unexpected happen.
GROUP MEDICAL
INSURANCE
Are you concerned about the welfare of your team? Providing access to group medical insurance allows them to have peace of mind and enables them to focus on their recovery.
Ideal when you want to offer an employee benefit that will give them comfort knowing faster diagnostics and treatment, whilst allowing you to scale the business and retain employees. Treatment typically starts with a referral from your GP and then through contact with your insurer to provide details of the condition prior to making a claim should you ever need to.
WHY BUSINESS PROTECTION?
52% of businesses would cease trading in under a year if a key person died or became critically ill
(Source Legal and General).
51% of business have some form of business debt yet only 2 in 10 use an insurance policy as security
(Source Legal and General)
Nearly 50% of businesses have no specific arrangements for their shares if a shareholder died. In reality if the deceased owner’s shares were passed to their family the surviving business owners could lose control of some or all of the business.
(Source Legal and General)
CASE STUDIES
“Dr V & Dr R were Private practice GPs operating as limited company directors with 50% shares. They also had a residential mortgage and young family. They wanted to review their income protection requirements and ensure they were sufficiently covered should they be unable to work or in the event of death. After reviewing their circumstances, we advised that they take Executive Income Protection and Relevant Life Insurance due to the tax efficiencies available. We arranged appropriate policies to provide cover to their expected retirement ages. This was a straightforward case with no medical or health conditions; however, it required medical screenings due to the value of cover required. The entire process was completed within a week (including the Screening).
They had peace of mind knowing their incomes would be protected and a cash sum would be paid to their beneficiaries, should either pass away. “
“Mr A and Mr B were self-employed shareholding directors operating a recruitment company. They wanted to protect their company profits in the event either suffered from critical illness or unexpected death.
Additionally, they wanted similar levels of cover for Miss C, their Head of sales, who was not a company director or shareholder but contributed significantly to the ongoing success.
The directors wanted enough liquidity to hire a replacement, in the event they or Miss C were diagnosed with a critical illness or passed away. We reviewed their circumstances and proposed Key Person Insurance cover. They now have peace of mind that should any of them suffer critical illness or pass away their company profits will be protected.”
“Mrs J was the sole shareholding director of her Ltd. Company. She was in the process of opening her first nursery and had arranged a business loan with a high street lender who prior to approval had requested a life insurance policy to be in place to cover the loan amount. Mrs J had also provided a personal guarantee, should the debt not be repaid by the business. We arranged a business loan protection policy. The sum assured matched the amount of money borrowed providing peace of mind that should Mrs J pass away, the business loan could be repaid in full, and her family would not be impacted in any way.”
“ABC Company Ltd were a small to medium size firm of developers with 3 shareholders that has grown considerably in size and value in a short period of time. During an annual review meeting with their accountants, it was highlighted that no formal agreement was in place detailing what would happen to their respective shares in the event any of them passed away or became critically ill.
They consulted with their company solicitors and agreed that in the event one shareholder passed away, they would like the remaining shareholders to acquire the deceased’s shareholder’s interest. They also agreed that they would include an option for their families to sell their shares should they pass away. After their accountants had provided a valuation of the company, we advised them to take a shareholder protection policy on each of the shareholding directors. The sum assured for each policy equated to the current value of their shareholding in the business. The policies were then written into individual business trusts and the appropriate cross-option agreements were completed.
They all had peace of mind that should any shareholder pass away in the future, the sum assured would be paid to the business enabling the surviving shareholders to use the funds to buy the shares from deceased shareholder’s estate/family.”
They had peace of mind knowing their incomes would be protected and a cash sum would be paid to their beneficiaries, should either pass away.“
Additionally, they wanted similar levels of cover for Miss C, their Head of sales, who was not a company director or shareholder but contributed significantly to the ongoing success.
The directors wanted enough liquidity to hire a replacement, in the event they or Miss C were diagnosed with a critical illness or passed away. We reviewed their circumstances and proposed Key Person Insurance cover. They now have peace of mind that should any of them suffer critical illness or pass away their company profits will be protected.”
“ABC Company Ltd were a small to medium size firm of developers with 3 shareholders that has grown considerably in size and value in a short period of time. During an annual review meeting with their accountants, it was highlighted that no formal agreement was in place detailing what would happen to their respective shares in the event any of them passed away or became critically ill.
They consulted with their company solicitors and agreed that in the event one shareholder passed away, they would like the remaining shareholders to acquire the deceased’s shareholder’s interest. They also agreed that they would include an option for their families to sell their shares should they pass away. After their accountants had provided a valuation of the company, we advised them to take a shareholder protection policy on each of the shareholding directors. The sum assured for each policy equated to the current value of their shareholding in the business. The policies were then written into individual business trusts and the appropriate cross-option agreements were completed.
They all had peace of mind that should any shareholder pass away in the future, the sum assured would be paid to the business enabling the surviving shareholders to use the funds to buy the shares from deceased shareholder’s estate/family.”
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There is an element of risk associated with everything you do personally and professionally. Managing the risks provides protection against financial liability for those unpredictable moments.