PROTECTION PLANNING FOR BUSINESSES

Key Person cover

It is very important to recognise the value of certain key employees in your business.

If you or one of your employees were to die prematurely or become permanently disabled and could no longer work, would your business survive financially? This is the key question that every business owner should consider. None of us know what will happen tomorrow, but without being properly prepared, the consequences on the business can be serious.

For a large company, it may be a minor concern but for a small company or partnership, the consequences could mean the collapse of the business.

To survive this problem, your business can purchase life insurance and disability insurance to cover you as a company principal, together with your other directors, with the business named as the beneficiary. Upon a triggering event such as death or disability, the policy will pay your business a certain amount of money, which it can use to cover its normal operating expenses like rent, utilities, employee salaries, advertising, and maintenance costs.

Shareholder protection cover can also provide funds on death   to buy a shareholding from the deceased person’s estate, to ensure that the business remains in the hands of those that are left. The value of the shareholding is agreed beforehand under a formal agreement.

The  business can also purchase life insurance and disability insurance such as critical illness or income protection on a key employee—that is someone who is key to the success of the business, which could be an employee who brings in substantial sales or has a specialised knowledge . Again, on the triggering event, your business would receive a sum of money to compensate for the lost income generated by the employee, or for the cost of replacing the employee.

Employee benefits are an important part of a businesses benefit package and are a good way of attracting the right calibre personnel to the business and of ensuring loyalty and good job performance. Group plans often have reduced costs.

Group plans could include:

Health insurance            (Private Medical cover)

Life insurance

Disability insurance        (Critical illness or income protection)

Pension Scheme