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Business Life Cover (Relevant Life)

It doesn’t matter what industry you work in, your business is one of your most important assets – and its important to protect it. Its not just your employees and other stakeholders, but also the livelyhood of you and your family.

Protect your shareholders

When a shareholder dies, its a major blow to a business and those close to it. Will the shareholders family want to cash in the shares? Would the remaining shareholders want to buy those shares. This is where shareholder protection comes into its own.

Protect Your Staff

Its not just the business owners that can benefit from a business insurance policy. The staff can too. Having a group private medical policy or life insurance for your collegues can be a great way to enhance morale with your valued collegues.

What are you covered for?

Let our expert advisers review your current cover, and see if we can spot any holes that may put you at risk

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Relevant Life Insurance.

Relevant Life Insurance is a policy your company takes out on your behalf as an employee or a director.

If you die during the tem of the policy, the insurer pays out a tax-free lump sum direct to your chosen beneficiaries (typically your family or civil partnership partner).

And, because the policy is paid by for your employer, it is treated as a business expense as long as it is written in trust correctly at the start.

For You…

You wont pay National Insurance or Income Tax on the premiums as the insurance is not classed as a benefit in kind.

For Your Employer

Its a tax efficient way to provide life cover for key people, without the complication (and tax implications) of personal life insurance paid through the company.

What about Tax?

As the policy should be written in a trust, it wont be part of your estate, therefore not liable for inheritance tax.

What if I leave?

If you ever leave your employer, you have the option of transferring the policy to your new employer (if they agree), or continue to pay the premiums yourself..

Benefits of Relevant Life Insurance Policy

A safe and stable business plan

In today’s cutthroat world of business, it’s crucial to underpin an enterprise with a safe and stable business plan. The death of shareholders can seriously jeopardize the strength and unity of a business.

By taking out relevant life insurance, shareholders enjoy total peace of mind knowing that if a fellow investor passes away, surviving shareholders will not have to worry about finding the money to purchase assets. Instead, they will receive payout funds that allow them to buy the deceased’s shares quickly and efficiently, ensuring business can return to normal as quickly as possible.

Support for Family Members

Although shareholders generally have an in-depth understanding of how to leverage their assets, inheriting family members often have no idea how to manage a portfolio.

Most would rather receive money, as this is far more useful to them. Cash payments can also help relieve the stress that families face when losing a key breadwinner.

With relevant life insurance, company stakeholders can rest easy knowing that their families will receive financial compensation in the case of their death. The policies guarantee a fair buyout price, as well as a quick, easy, and stress-free process.

Illness and Disability

Relevant life insurance not only supports fellow shareholders and family members in the case of death but also covers serious illnesses.

Given the right agreements and policies are in place, a sick shareholder can sell shares to continuing shareholders.

Should a shareholder fall ill, knowing they have relevant life insurance will be a big weight off their minds.

Types of Relevant Life Insurance

In the UK, relevant life insurance agreements can be written in three different forms. The types of policies that shareholders and companies take out will depend on the nature of their operations and individual preferences.

‘Life of Another’ Policy

This method is generally adopted when a business is run by just two shareholders. Both parties apply for a policy on the life of their fellow shareholder, representing the value of their current shares in the business. Each shareholder pays the premium out of their own pocket to avoid tax and national insurance. Should a shareholder die, insurance is paid to the surviving policyholder who can then use the funds to purchase shares from the deceased shareholder’s family or estate. The surviving shareholder will then be the sole owner of the business. When there is a large age gap between the two directors, policy prices can vary significantly.

Company Share Purchase

Under this method of relevant life insurance, the company itself (as opposed to the surviving shareholders) purchases shares back from a deceased shareholder.

The company takes out policies on all the shareholders, matching the value of each investor’s shares. As the company pays for the premiums, it receives any funds in the event of a shareholder death.

Due to company law and tax procedures, it is generally a complex and lengthy process, so it is advisable to engage corporate lawyers and tax advisers to ensure that policies are watertight and compliant.

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‘Own Life’ Policy Held Under Business Trust

This method sees each individual shareholder take out their own policy held under a business trust, equal to the value of their shares and can be drawn up on a fixed term or until retirement.

Should a shareholder die, other shareholders can use policy payout funds to purchase their shares, dividing shares equally among surviving shareholders.

Why consider Business Insurances?

From small-scale two-person enterprises to multinational corporations, relevant life insurance is a must-have policy for any savvy company.

Besides ensuring the stability and longevity of the business, policies also offer the peace of mind that fellow stakeholders and family members will be looked after if the worst happens.