Do you have adequate business protection?

Business protection cover is a crucial part of the financial planning process for your business. Unfortunately, it is one area that is often overlooked. If you have a business, you will have insurance for many things.  But what if the worst was to happen and you or one of your key staff were to die?  Think about it -  Out of the five options below, what would have the worst effect on your business?

1. Your business mobile phone is stolen
2. The photocopier breaks down
3. Your premises are broken into and vandalised
4. A business vehicle is written off
5. Your co-owner / key worker has a heart attack or dies

If your business is like most in the UK then it probably has got insurance for 4 of these 5 events. But what would be the consequences to your business if the worst thing on the list happens – your co-owner / key worker suffers a serious illness or dies?

What is Life Insurance?

For many, taking out life insurance is simply a way of helping to protect those that we love by ensuring that they can maintain their lifestyle, should you no longer be around.  There are three basic considerations when looking to buy life insurance (also known as life cover)

• What do I wish to protect?
• How much cover will I need?
• How long do I need life cover for?

Do I need Shareholder Protection?

If your business partner was too ill to work or died suddenly, you’d want to make sure that their shares ended up in the right hands – and there are no better hands than the business owners’.

Without the capital to buy the shares, you could find yourself working with whoever inherits them, or with anyone they decide to sell them to.  Either way, if they had a majority shareholding it could mean an unknown boss calling all the shots and that’s not exactly what you signed up for.

By putting shareholder protection in place, you could make sure the business gets the funds to buy back the shares from a critically ill partner or their estate.  

When is Key Person Cover needed?

Is a key person all that’s keeping your business in the black?  Many small businesses rely on a few individuals who do a number of roles.   The loss of any one of them could be a real threat to the financial stability of their business.  Key person cover can provide capital (depending on the cover selected) in the event a key person is diagnosed with a specified critical illness or dies.

The cash could give a vital lifeline to pay loans, ease cash flow and fund training and recruitment of a replacement member of staff.

What are Relevant Life Policies?

If you own a small business there’s a brighter way to buy life insurance for yourself and your key employees.  With a relevant life policy the business makes the payments, not the person who’s covered.  That means you won’t pay any national insurance contributions or income tax on the premiums but you still get the benefits of corporation tax relief, and that all adds up to big tax savings.

For more information on any of the above, please contact Simon Hollin or a member of the Wealth Management team who will be happy to provide more details. 

For your Free Retirement Consultation, please speak to a member of our team.

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