Independent Business Protection Advice
In simple terms, business protection serves as a safeguard for your business in the unfortunate event that a director, partner, or key employee experience a critical illness or passes away. Establishing this financial safety net is crucial in enabling businesses to swiftly recover and mitigate the effects if such a disastrous event occurs.
Any business, regardless of its size, is susceptible to unforeseen challenges. However, you can proactively manage these risks by preparing in advance. Whether your business operates within a partnership, limited liability partnership (LLP), functions as a sole trader, or runs a limited company, we will guide you through the essential aspects to consider.
What types of business protection are available?
Key Person Cover - This provides a safety net in the event of the death or critical illness diagnosis of a key person within the company. It protects the business from the financial impact of losing a key figure (owners / managers), whose absence would have a significant impact on the financial position of the company. This support enables the business to continue its operations as seamlessly as possible during a challenging period.
Shareholder Protection - In the unfortunate event of a business owner's death or the diagnosis of a critical illness, their portion of the business typically transfers into their estate. In many cases, the fellow business owners or shareholders may wish to purchase that share from the beneficiaries, but obtaining the necessary funds can be challenging and borrowing can be costly. Shareholder protection provides a solution by enabling business owners to repurchase shares from a co-shareholder who has been diagnosed with a critical illness or has passed away. This policy helps ensure that surviving owners retain control and mitigates any disruptions to the business.
Relevant Life Cover - This allows employers to provide a death-in-service benefit for their employees. This tax-efficient life insurance policy disburses a tax-free lump sum in the event of death or upon the diagnosis of a terminal illness. The company covers the premiums, typically considered an allowable business expense by HMRC, thus exempt from corporation tax. Importantly, these premiums are not classified as a P11D benefit in kind for the employee. Moreover, both the premiums and any lump sum benefit paid qualify for relief from income tax and National Insurance contributions.
Executive Income Protection – This is designed for small-medium businesses to cover the costs associated with offering sick pay benefits to an employee. The arrangement involves the employer (the policyholder) purchasing and funding the policy on the employee's life (the insured person). In the event that the employee falls ill or sustains an injury that makes them unable to work, the monthly benefit (up to 80% of the employee’s earnings plus employers NI and pension contributions) is paid to the employer (the policyholder). The employer subsequently channels this payment to the employee through the PAYE system to facilitate continued sick pay support. This usually counts as a tax-deductible business expense for the employer and is not a P11D benefit in kind, meaning there is no additional tax to pay as a result of having the cover in place.
Looking for business protection insurance advice
in Leamington Spa & Warwickshire?
Jack Bewick offers tailored and specialist business protection advice Warwick, Leamington Spa, Kenilworth, Stratford upon Avon, Coventry & Warwickshire, Lutterworth & Leicestershire areas.
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