Business Protection
DEBT
BUSINESS LOAN PROTECTION
Just as you would cover a mortgage with personal life insurance, you can take out business loan protection (which is sometimes taken out as life and/or critical illness cover) to cover the full amount of the loan
The financial consequences of an employee's critical illness can be just as devastating for a business as for the individual. Critical Illness Cover London tailored for businesses is easy to customize to suit your company's needs. FOL Wealth advisors offer Critical Illness policies with flexible coverage options to protect your business.
A Critical Illness Cover London policy established through a business trust, along with a cross option agreement, enables a partner or shareholder to arrange for their business shares in case of illness. This business protection also provides the remaining shareholders with funds to maintain control of the company by purchasing the ill partner's shares with the policy payout.
WHAT IS BUSINESS LOAN PROTECTION?
Business Loan Protection helps you pay outstanding overdrafts, loans or commercial mortgages should the guarantor die or become terminally or critically ill during the policy term.
HOW DOES IT WORK?
CONDITIONS WE CONSIDER
DETERMINING THE LEVEL OF COVER
TAX
TRUSTS
PROFIT
KEY PERSON PROTECTION
If a key person dies or suffers a critical illness during the policy term, Key Person Protection pays out a lump sum ensuring your business can continue to meet its continued financial needs.
WHAT IS KEY PERSON PROTECTION (PROFIT PROTECTION) ?
Should a key employee fall terminally or critically ill or die during the term of the policy, the protection will cover financial loss such as reduced sales, loss in profit, recruitment costs, increased workload for remaining staff or disruption of development plans.
HOW DOES IT WORK?
WHO IS A 'KEY PERSON'?
HOW TO RECOGNISE A KEY PERSON?
DETERMINING THE LEVEL OF COVER FOR A KEY PERSON
TAX TREATMENT OF PREMIUMS
TRUSTS
PARTNERSHIP
PARTNERS’ SHARE PROTECTION
Partners’ Share Protection provides money so that should one partner die or suffer from a terminal illness, the remaining partner(s) in the business may be able to afford to exercise an option to buy the deceased partner’s interest from his or her estate. Provision can also be made if a partner/director suffers a critical illness.
KEY ISSUES FOR PARTNERS TO CONSIDER IF NO PROTECTION IS IN PLACE
Where a share of a partnership has passed to the estate of a deceased partner, the family has two main options:
Neither of these avenues is problem-free. Commercial experience, age, qualifications, ability, commitment or other reasons could prevent any members of the deceased’s family being capable of becoming a partner.
If the family of the deceased wishes to sell their interest in the partnership, the remaining partner(s) may find themselves working with an unwelcome new partner. Also, it may be difficult to find buyers which could lead to financial problems for both the family and the business.
- A member of the family could take over the deceased’s position as partner.
- The family could realise the value of the interest by selling it.
Neither of these avenues is problem-free. Commercial experience, age, qualifications, ability, commitment or other reasons could prevent any members of the deceased’s family being capable of becoming a partner.
If the family of the deceased wishes to sell their interest in the partnership, the remaining partner(s) may find themselves working with an unwelcome new partner. Also, it may be difficult to find buyers which could lead to financial problems for both the family and the business.
HOW DOES PARTNERS’ SHARE PROTECTION WORK?
DETERMINING THE LEVEL OF COVER
WHY DOES A FORMAL PARTNERSHIP AGREEMENT MATTER?
CROSS OPTION AGREEMENT
TAX
TRUSTS
PROTECTION
SHARE PURCHASE PROTECTION
WHAT IS SHARE PURCHASE PROTECTION ?
The loss of a business owner may destabilise the business and can quickly lead to financial difficulties. LLP, Partner, Director Share Protection means if the worst does happen, the remaining partners, directors or members could stay in control of the business.
Share purchase protection is a life or life and critical illness policy that allows business owners to buy the insured shareholder’s interest in the firm should one of the business owners die or become either terminally or critically ill.
Share purchase protection is a life or life and critical illness policy that allows business owners to buy the insured shareholder’s interest in the firm should one of the business owners die or become either terminally or critically ill.
HOW DOES IT WORK?
LIFE
RELEVANT LIFE PLAN
A Relevant Life Plan is a term assurance plan available to employers to provide an individual death in service benefit for an employee, designed to pay a lump sum if the employee dies or is diagnosed with a terminal illness during the policy term (the latter if terminal illness cover is chosen). The Relevant Life Plan is paid for by you the employer.
FOL WEALTH’s Relevant Life Insurance London - Is it right for me?
- If you own or work for a company that doesn’t offer group life insurance (maybe because it’s too small to be eligible) but would like the company to offer life insurance as a tax-efficient employee benefit for yourself or another employee
- If you are running or working for a company that offers a group scheme but want to buy extra life insurance that does not count towards your annual or lifetime pensions (this could be especially important for high-paid employees who are close to retirement age);
What is relevant life insurance and how does it work?
ALL Relevant Life insurance London policies are written into trust, meaning they are paid out in a lump sum in the event of the employee's death or terminal illness while on the job during the term of the policy.
What are the advantages?
- It’s also tax efficient for the employee, as HMRC typically treats the premiums as an ‘allowable business expense’ for the employer, rather than a benefit in kind for the employee. As a result, the employee doesn’t have to pay any income tax or National Insurance on the premiums – this can be a huge saving for a high or additional rate taxpayer.
- The policy's trust structure provides tax benefits for beneficiaries, as any payout they receive will be exempt from income tax and, in most cases, inheritance tax. Furthermore, since this is a non-registered arrangement, any payout does not count against the employee's lifetime pension allowance.
- The employer can claim tax relief on the premiums, making it tax-efficient for the business. This is allowed if the premiums are deemed by the local tax inspector to be for employee remuneration purposes only. Furthermore, the benefits are placed into a trust for the employee, so they are not taxed as business assets.
Get in touch with our Relevant Life Insurance London specialist – info@folwealth.com
