Relevant Life – A Relevant Life Plan is paid for by the employer to provide an individual death in service benefit for an employee. It will pay a lump sum if the employee dies whilst employed during the length of the policy. It will also pay out if the employee, whilst employed, is diagnosed with a terminal illness at any time during the cover, providing they meet the insurer’s definition. The lump sum will be paid to the employee’s family.
Relevant life policy provides a tax efficient benefit provided by an employer for an employee. Employer can benefit from corporation tax relief and no National Insurance contributions to pay on the policy payments paid to fund the Relevant Life Policy.
The employee can continue or convert their Relevant Life Plan to a personal plan or move it to a new employer without the need for further medical evidence or underwriting. No National Insurance contribution to pay, the policy payments won’t be taxed as benefit in kind and policy payments and benefits don’t count towards annual or lifetime pension allowances.
Key Person Cover – This policy protects the business against any loss of income caused by key staff members. The business takes out a life insurance policy on staff members’ lives to protect any large profits they generate. It is a contingency plan insuring the business against financial loss because of a death or critical illness (if chosen) of a key person.
This policy is a type of life assurance or life assurance and critical illness cover taken out to cover the life of a key person within your business. The policy is owned and paid for by the employer and the pay-out is payable to the employer.
The loss of a key person in the business could have a severe impact and the business could suffer financially. Key Person protection is designed to pay a lump sum to help the business recover from loss profit or finding and hiring a replacement.
Shareholder / Partnership Cover – This policy provides a lump sum should a shareholder or business partner die. This is an opportunity for the surviving shareholder or partner to regain full control of their business when they might not have the capital to do so. This helps to cover the cost of buying their shares back from the beneficiaries – so retaining control of the company.
What happens when a partner or shareholder dies or suffers a critical illness?
The surviving partner or shareholder might not have the resources or may be unable to raise funds to purchase the outgoing shareholder’s share.
The family of the partner or shareholder could become involved either in running the business or force to sell the shares.
Loan Protection – Should a shareholder or business partner die or contract a serious illness, lenders may have the right to demand the business immediately repay any outstanding loans. These could be difficult to pay off at short notice
If the business has outstanding borrowings such as a loan, commercial mortgage or a director’s loan, business loan protection can help repay these should one of the business owners die or suffer a critical illness. This policy is similar to personal life insurance taken out to cover a mortgage