One of the great Scots American entrepreneurs, Andrew Carnegie once said that if he lost all his factories, ships and railroads, as long as he had his people he would be able to get all his wealth back again. As he said, “people create profits not machines”.
Why do I need business protection?
Business Protection is about protecting these people and falls into four areas.
Key Man Insurance
Keyman Insurance is a life insurance policy, which can have critical illness added. It is written on the life of a key business employee, but it is owned by the business. If something should happen to that person, the policy is paid out directly to the business, or this reason the business pays the premiums.
Relevant Life Policy
A Relevant Life Policy is similar to a life insurance or a death in service benefit. Basically should an individual pass away during the length of the policy, a lump sum could be paid to their family or dependents. One of the main differences between the two policies is that a Relevant Life policy is more tax efficient (under current legislation tax year 2018/2019), as well as being a major incentive or benefit for employment staff members.
A Relevant Life Plan is paid for by the business or company but covers the individuals they employ. This means that not only does the company offer this as an employee benefit but also it is also considered a legitimate business expense.
Shareholder Protection is a type of insurance policy which secures the organization itself and its shareholders against the passing or major illness of a proprietor or shareholder.
If a shareholder or company owner should fall ill with a terminal or critical illness, or should pass on, Shareholder Protection could protect the other shareholders by issuing a lump sum to them. This payment could be used to protect the other shareholders and allow them to acquire the shares left and to ensure that the smooth running of the business continues.
Without some form of protection in place the shares or business could pass on to outside persons who have not previously been involved in the running of the company, such as family members. This could in turn affect the stability of the organisation and leave the remaining shareholders with a minority control over their own company.
In addition to providing protection for the remaining shareholders or business owners Shareholder Protection can also ensure that the family members of the deceased or critically ill shareholder can be provided for financially. The lump sum from the policy should be able to cover the cost of purchasing the shares from said family members ensuring they are able to gain access to the funds with no immediate problems.
Shareholder Protection Policies are available to all shareholders within an organisation so each individual can ensure their investment is secured in any event.
Loan Protection Cover
When a business borrows money from a bank or other financial institution, it is common that they will want some form of life cover or possibly critical illness cover to repay all or some of that loan on death or serious illness. It could also be that the business owners have lent money to their own business. These are called Director’s or Partner’s loan accounts and also need to be repaid on death.
How can we help?
Contact us today on 01283 567 200 for a free initial consultation.