BUSINESS cover options

Commercial insurance is insurance that protects businesses. It covers businesses against losses, arising from things like damage to property or injury to employees, and is a term commonly used to label core business insurance covers like public liability and employers' liability.  

Relevant Life Cover is a tax efficient way for an employer to provide death in service cover for one employee or a salaried director. This policy must be placed in a trust for the beneficiaries of the person we're insuring.

If it's not placed into a trust it won't be classed as Relevant Life Cover, which means the person taking the policy out and the person insured by it could both face extra tax charges. 

We can only insure people until they reach the age of 75.

Losing the skills, knowledge and contacts of a key employee who can’t work due to illness or injury, can have major financial consequences both for them and your business. Their absence could leave your business facing the cost of covering their sick pay when they aren’t at work as well meeting any ongoing employer pension contributions and employer National Insurance Contributions. Although you can’t predict the future, Executive Income Protection cover can give your business vital financial breathing space, and it’s also a tax efficient protection plan for both you and your employee.

If the person insured is unable to work and we begin to pay your claim, the monthly benefit is paid to your business, which is normally classed as a trading receipt. You then pass the appropriate amount to your employee via PAYE, after deduction of any employer's National Insurance Contribution or pension contribution, if you choose to cover these expenses. This means the overall position should be tax neutral for your business. However we recommend you check the position with your accountants and your local inspector of taxes.

Business Protection Combined Life and Critical Illness Cover is aimed at small and medium-sized businesses (SMEs) to help safeguard their financial future by providing a one-off cash payment in the event that the business owner or key person dies or is diagnosed with a critical illness. 

Business Protection targets three key elements - ownership, profit and debt. It’s important to understand the setup of the client’s business, who the owners are and the risks they face to help identify and justify the need for Business Protection and the basis for the policy. The different types of Business Protection are Key Person Cover, Share and Partnership Protection

A key person could be the business owner, director, sales person or any employee with specialist skills or expertise. Losing a key person can be disastrous for the long-term survival of a business and the proceeds from a policy can give the business a cash injection, either used to protect profits or clear debt to help trading continue.

The policy provides the owners of a business with a lump sum to buy the affected individual’s share of the business in the event of them dying or being diagnosed with a critical illness, helping the surviving owners retain full control and ensure the deceased family’s estate receives fair settlement. 

The business owners can choose whether the policy is written on an own life or life of another basis however life of another is usually only suitable where there are just two owners, and doesn’t provide any flexibility for future business changes.

Regardless of whether the policy is written on an own life or life of another basis a suitable double or cross option arrangement needs to be in place which facilitates the sale of the deceased’s share to the surviving owners. As critical illness cover is included a suitable single option agreement should also be in place to allow a shareholder to sell their share to their fellow shareholders if they’re diagnosed with a critical illness.