BUSINESS PROTECTION

There are many reasons why your business may require cash in the form of a loan. For example, you may need the money to:

• Buy stock
• Finance the cost of new equipment
• Purchase new premises
• Meet product development costs
• Recruit a new sales team

If you have taken out a loan for your business, you will need to consider not only how you’re going to meet ongoing payments, but how you might finance the full repayment should the commercial lender call in the entire loan prematurely, as may be the case if a key individual passes away. 

Similarly, if your company has been sending out finance from a director’s loan account, and the director dies, their estate may demand repayment of the outstanding loan.

Business loan protection can provide a business with a cash sum that can be used to help repay a loan on death or, if required, the critical illness of an owner, a managing director, or a specific employee.

Whether it’s the founder, the MD or another essential executive, most businesses have an individual who is key to the success and profitability of the business: a ‘key person’. If this person passes away or becomes critically ill, you should consider the financial implications of this, which could be, for example:

• The costs of recruiting and training a replacement
• A loss of sales and new contracts
• A loss of confidence in the business
• Additional pressure on senior personnel to take on the responsibilities of the key person

Keyman insurance can provide funds to help your business cover the financial impact of this scenario. These funds would yours to use, as you consider appropriate, for the benefit of your business.

Most group risk providers are reluctant to write schemes for fewer than five members, and even then, only as part of a registered group life scheme.

The relevant life plan available to AIC Financial Ltd is different. It is a single life, stand-alone death-in-service plan that provides benefits on an individual basis.

This relevant life plan policy includes:

• Unique individual stand-alone cover
• Tax advantages for high earners
• Premiums not taxed as benefit in kind
• Premiums as an allowable expense to the employer
• Cover up to fifteen times the person’s annual salary

While relevant life plans are normally aimed at high earners, they can be tailored to suit the requirements of any employee. What’s more, the payments may also be treated as an allowable expense for the employer in calculating their tax liability, which means it’s also suitable for small businesses that do not have enough eligible employees to warrant a group life scheme.

Please note, we are not the provider of this cover. We simply share advice in relation to the policy and setting it up. Please contact us for more information.

If you are a business partner or shareholding company director, your share in the business is likely to be one of your most valuable assets. So, what would happen to it if you were to die?

Would the surviving partners or directors have easy access to funds to purchase your share of the business from your estate, in the event it was passed down to your beneficiaries?

Would those who inherit your estate want to involve themselves in the business? Would they be able to sell their share?

What if you were diagnosed with a critical illness? If you wished to retire from the business, who would be able to provide the funds to purchase your share?

All of the potential situations above can be solved by taking out partnership or shareholder protection. This kind of cover will combine the means to provide the necessary monies with a legal agreement that ensures those funds end up in the right hands.