Business Protection: Shareholder and Partnership protection
Length: 1min 20sec
What is Business Protection Insurance?
Safeguard your business's financial future and ensure security across your organisation
Business Protection helps look after your company’s financial future against the unexpected loss of a business owner or key person. Simply put, it’s
- life insurance (which can also include critical illness cover)
- income protection cover
for either someone crucial to your business’s profits, or one or more of your business owners.
Why is Business Protection Insurance important?
Ensure protection against losses and damage whilst insuring the people that matter the most
If a key person or shareholder in your business either passes away, becomes critically ill, or a key employee is away from work due to accident or sickness, you’ll want insurance that assists you. From guaranteeing some form of continuity to sustaining your growth strategy, Business Protection Insurance safeguards your company’s financial security.
With the right type of protection in place, you’ll be able to repay any debts or liabilities, continue trading, invest in growth opportunities, and protect the interests of your shareholders and creditors. What’s more, your business can handle the effect of any loss or sickness of key people without worrying about its financial future.
Different types of Business Protection
You’ll want the right type of insurance to support your business
-
Key person cover
Provides a financial safety net if a key member of staff dies or is diagnosed with a serious illness (if critical illness cover is also selected).
-
Share and Partnership protection
Helps business owners keep control of the company if one of them passes away or is diagnosed with a critical illness.
-
Relevant Life Cover (RLC)
Allows companies to offer a death-in-service benefit to its employees (including salaried directors).
-
Executive Income Protection
Provides a monthly payment to an employer if the insured employee can’t work due to illness or injury. The payments help to cover the cost of an employee’s sick pay as well as National Insurance contributions and pension scheme contributions, on behalf of the employee.
The different types of business protection insurance available
As no two businesses are the same, we offer a range of products to suit your needs
Business Protection: Key Person cover
Length: 1min 32sec
Business Protection: Relevant Life cover
Length: 1min 39sec
Video Transcripts
Transcript - Business Protection: Shareholder and Partnership protection
What would happen to your business if one of the owners suddenly died or suffered a serious illness?
Could you afford to buy their share?
If not, the affected owners family might sell their shares to a competitor or someone else completely unsuitable.
This can be disastrous for the long term survival of the business you've worked hard to build.
Business owners are usually the life-blood of the firm, with staff relying on their experience and knowledge.
Their sudden loss can heavily impact morale, leaving staff worried about the future of the business and their jobs.
Shareholder and Partnership Protection is a type of insurance that gives surviving business owners the money needed to buy the affected shares.
It can help ensure you keep control of the business and give staff confidence that their jobs are safe.
The money also ensures that the deceased owner's family are looked after and receive full market value in exchange for their inherited share of the business.
You probably already protect many of the important things that keep the business running smoothly, like property, fleets and stock.
So it makes sense to insure your most valuable assets, your business owners.
For help with setting up Share or Partnership Protection, please speak to your financial adviser.
Could you afford to buy their share?
If not, the affected owners family might sell their shares to a competitor or someone else completely unsuitable.
This can be disastrous for the long term survival of the business you've worked hard to build.
Business owners are usually the life-blood of the firm, with staff relying on their experience and knowledge.
Their sudden loss can heavily impact morale, leaving staff worried about the future of the business and their jobs.
Shareholder and Partnership Protection is a type of insurance that gives surviving business owners the money needed to buy the affected shares.
It can help ensure you keep control of the business and give staff confidence that their jobs are safe.
The money also ensures that the deceased owner's family are looked after and receive full market value in exchange for their inherited share of the business.
You probably already protect many of the important things that keep the business running smoothly, like property, fleets and stock.
So it makes sense to insure your most valuable assets, your business owners.
For help with setting up Share or Partnership Protection, please speak to your financial adviser.
Transcript - Business Protection: Key Person cover
Business as usual can suddenly become very difficult if one of your key employees, someone the business heavily relies on, dies or suffers a serious illness.
How long could your business survive without them?
Different types of businesses will have different key people. They could be your best performing sales person, a software engineer, one of the business owners.
And the risks associated with losing a key person can include:
- Production being stopped.
- Sales targets being missed.
- The loss of important business contracts.
- The business might have to pay large penalties if goods or services aren't delivered, and your bank might lose confidence business loans can be repaid and demand the debt is cleared.
Key Person cover is a type of insurance that can protect the survival of your business. It pays out a lump sum if your key employee dies or is diagnosed with a critical illness.
You can use the money to:
- Clear business debt that would have to be repaid due to the loss of a key person.
- Help cover recruitment costs.
- Make up any loss in profits and keep the business running whilst you're looking for a replacement.
Key Person cover can give your business the breathing space needed during a period of instability and uncertainty.
To find out more, please speak to your financial adviser.
Transcript - Business Protection: Relevant Life cover
If you’re considering death in service life insurance for your employees then Relevant Life cover could provide a smarter tax efficient and flexible solution for the business and your staff.
Relevant Life cover is a type of life insurance that allows companies to offer death-in-service benefits to employees and directors the company pays a salary to. Its set up and paid for by the company and then placed in trust for the employees chosen beneficiaries.
If the employee dies during the policy term, the insurance pays out a tax free, lump sum amount of money via the trust to those chosen people.
Benefits of Relevant Life cover include:
Premiums are usually treated by HMRC as a tax deductible business expense. This means they can usually be offset against the company’s corporation tax making it a tax efficient way to offer staff life insurance, and the premiums don’t form part of the employees remuneration or benefits package. So they don’t have to pay income tax from National Insurance contributions on the premiums.
Because the policy is placed in trust any money paid out shouldn’t form part of the employee’s estate for inheritance tax purposes. Also because the money is paid via a trust it can be paid very quickly, helping ensure your employees families and loved ones are looked after when they need it most.
For more information on this type if death-in-service life insurance for your employees, please speak to your financial adviser.
Advantages and disadvantages of Business Protection Insurance
When is it right for you?
- If you want or need a financial safety net in the event a key person passes away, becomes critically ill, or is off work due to sickness or accident.
- If you want the security of repaying a business loan either after a key person is diagnosed with a critical illness or sadly passes away.
- If you want security and continuity for your business, you can enable any remaining shareholders or key people to buy out the shares belonging to the key person who has either passed away or been diagnosed with a critical illness.
- Business Protection Insurance offers the deceased or critically ill shareholder’s family and loved ones fair value for the shares bought.
- Executive Income Protection allows you to continue paying your key people if they are off sick due to illness or injury, and can help your employee to meet their financial commitments and not rely solely on their personal savings or state benefits.
- It also allows your employee access to LV Doctor Services and rehabilitation support to potentially help them back to work quicker.
When is it not right for you?
- Shareholder Protection Insurance, which is a specific type of business insurance, might not be the right choice for businesses that have been operating and trading for five years or less. For businesses with less than five years in trading, buyback of shares might result in a higher tax liability.
- Your policy should cover the key people who are critical to your business’s operations. Depending on the size of your organisation, the risks you want to mitigate and the types of employees you’re looking to cover, it could prove costly for your business.
- You may be restricted on the amount your business can borrow or insure against.
- Executive Income Protection is not available to sole traders or the self-employed, where employees already have enough sick pay in place or want protection in the event of unemployment.
When should you seek financial advice?
Find straight-forward financial advice that understands your needs
It’s best to always have a financial adviser on hand to discuss critical decisions like these. At LV=, we’ve partnered with LifeSearch to offer straight-forward, jargon-free financial advice. When you speak with them, they’ll guide you through the different choices and help you make the right decision for your business and personal needs.
Who needs Business Protection Insurance?
- Sole trader
- Ltd company
- Partnership
- Limited Liability Partnership (LLP)
Why do you need Business Protection Insurance?
You need Business Protection Insurance to support your business against the risks of losing critical business leaders and ensure future financial security. You’ll not only be safeguarding your business’s interests, but you’ll be insuring the people who are critical to your business’s operations.
What's included?
With a range of extras included, we’ll make sure things are a little easier
Why choose LV= for Business Protection?
Insurance and protection from a company that’s been trusted for 185 years
- We’ve been supporting businesses for over 9 years.
- Our policies come with a business advice line that will provide you with advice on topics such as employment law, disputes, commercial and contractual disputes and health and safety law.
- Enjoy perks from us that include our LV= Doctor Service, giving your employees access to medical support at their convenience.
Financial Advice for businesses
Ready to take the next step and secure your business’s financial future?
We've chosen to partner with LifeSearch to offer you independent advice on which business protection products are right for you.
Mon to Thu - 8am - 8pm Fri 8am - 6pm
For Text Phone first dial 18001
Calls may be recorded and may be monitored for training and audit purposes.
FAQs on Business Protection Insurance
How do I know who is a “key person” within the business?
While some will be obvious, such as senior management and directors, there may be other people, such as a one-person department. When taking out a policy, our insurance team will be happy to help you with criteria for how you can determine who key people are within your business.
Why do employers need to consider business protection?
Business Protection Insurance helps to safeguard the running of a company in case a key internal stakeholder passes away or becomes seriously ill. A business protection policy provides financial peace of mind during that transitionary phase.
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