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Got Your Own Business?
Business Life Insurance
If you have your own business you have the opportunity to save tax with your life insurance. Whether it is just yourself in the business or you and your other half, your company could be paying for your life insurance to save you money.
There are a few options, but the most common for smaller businesses, is Relevant Life. This is paid by the business and if the named person dies, the pay-out goes to whoever is named in the Trust (usually their partner).
Other business life insurance policies include; Keyperson Insurance and Stakeholder Protection, which pay to the other directors, the business or it's shareholders.
Relevant Life
A Relevant Life Plan or Relevant Life Cover allows employers to give death-in-service benefits to their employees outside of a registered group life scheme (life insurance that covers a whole group of people with one agreement). It is a tax-efficient life insurance policy, set up by you as the employer and pays out a tax-free lump sum on the death of the person insured. The proceeds go to the employee's family, nominated charity or financial dependants.
It will also pay-out if the employee, whilst employed and covered by the plan, is diagnosed with a terminal illness, with a life expectancy of less than 12 months and meets the plans definition.
The employee or their family can make a claim when the person covered dies or meets the policy definitions of a terminal illness.
Your business (as the employer) pays the premiums and the policy is owned by the business, not your employee. This cover might be a good benefit to provide for your higher earning employees who might exceed their personal pension lifetime allowance. Or if you have members of group schemes who want to top up their benefits.
If you are a small business (SME - Small to Medium Enterprise) and don't have enough eligible employees to justify a group life scheme, a Relevant Life plan will be particularly beneficial.
The policy must be placed into a Relevant Life Plan Trust, which can be tax-efficient for both employee and employer. Cover My Bubble can help with this and send you the relevant paperwork by mail or email, with most of the details completed for you to double check, sign and return.
Keyperson & Shareholder
Keyperson insurance protects the business for a person, or group of people, named on the policy against death. It’s similar to a life insurance policy but unlike life insurance, where the pay-out would go to a loved one, the successful claim would go to your business to cover lost profits and/or the costs of finding a replacement.
Shareholder Protection Insurance is used to protect your business for the possibility of a shareholder getting a serious illness, injury or dying. It provides a financial safety net for your business should the worst happen to one of your shareholders. This type of cover is business protection insurance, which allows other shareholders to buy shares from each other, should a shareholder pass away or be unable to work due to death, serious illness or injury. Life insurance is the most common policy, but critical illness can also be included as an additional extra cover.