What are the benefits of business life insurance?
According to recent research from Legal and General, 40% of businesses would cease trading in under a year if a key person or owner died or became critically ill, highlighting the need for companies to seek for business life insurance for such scenarios.
Business Life Insurance
When looking to the future, succession planning can benefit enormously from business life insurance, allowing surviving partners to purchase shares from a deceased partner as part of a buy-sell agreement. Among the other benefits of business life insurance are tax advantages, as accounts held within a business life insurance policy are tax-free while they grow, and there is also the long-term liquidity that they provide as opposed to term insurance policies. We have a range of different business life cover products, all with their own benefits to the holding company.
Key Man Insurance
Key man life insurance provides a vital contingency plan for businesses should key staff members become critically ill or die, covering any loss in income and expenses. It acts as emergency funding when your business really needs it the most and can help you with the task of finding and training a suitable replacement for the key member of staff in question.
Relevant Life Cover
Not counting as part of a personal pension allowance and with the advantage of being tax efficient, relevant life insurance provides insurance on the life on an employee for them and their immediate family, with payouts going to the pre-chosen beneficiaries. This option is popular among high earners, while SMEs take advantage of the product as a form of life insurance cover for staff members. Policies are arranged on an individual basis, making them suitable for smaller entities as opposed to large companies that are likely to have group policies in place. Crucially, it leaves family members of employees financially protected, should the worst happen.
When owning and running a company as a partnership, it is important to make provisions should one of the partners become critically ill or die. In this event, partnership protection allows the remaining partner to buy out the deceased partner, taking the reigns of the company. It provides protection for the investment of both partners and ensures that a company does not have to cease trading once a partnership is dissolved.
Protection can also be needed for businesses in the event that a major shareholder becomes critically ill or dies, allocating funding for the remaining shareholders to buy out the shares of the deceased and divide them. Similar to partnership protection, shareholder protection can be essential to the long-term livelihood of a business, ensuring the money and time invested into a business have not gone to waste in the event of a serious shareholder illness or death.