Shareholder Protection
Shareholder protection is for businesses with two or more shareholders. This policy protects you all if one of the shareholders dies.
Key Person Insurance can safeguard your business against the potential financial loss, caused by you (or someone else who is key to your businesses success), contracting a specified Serious or Critical illness and needing an extended period out of the business recovering. It also covers death.
Key Person cover is typically taken out with Serious or Critical illness but can be just life insurance. Key Person Life Insurance comes with terminal illness, where you can claim early if you are told you have 12 months or less to live) at no extra cost.
Key Person Business Serious/Critical illness is more expensive than Key Person life on its own as you are much more likely to contract one of the specified business illnesses, than die, in your working life. If you contracted one of the specified Critical or Serious illnesses in the term of your policy, the pre-determined lump sum will be paid into your business (we can help you decide the levels and terms for you and your business needs as part of our free FCA regulated service).
As you can see, we will search the Business protection market for you, based on an analysis of a number of leading insurers, including: Aviva, L&G, LV=, Royal London, Vitality, Zurich etc. You can be covered for at least 33 different critical illnesses, such as; Advanced Cancers, Heart attacks, Strokes, Multiple Sclerosis etc. Some insurers cover more than 100 different illnesses, so the best priced option isn’t always the most suitable for your company.
A ‘Key person’ is an employee whose death or continued absence would affect the profits and the running of the business.
The loss of you, an integral employee or other director may result in:
Key person Insurance is a life insurance policy, which can have critical illness added. It is written on the life of a key business employee, but it is owned by the business. If something should happen to that person, the policy is paid out directly to the business. Typically, the lump sum payment is used to either replace the person affected or replace the revenue they would have bought in, but it can be used however you see fit. For this reason, the business pays the premiums and owns the policy.
This is where our advice comes in, but it is worth thinking about - What you would need if you or another keyperson was off long term recovering from a critical illness.
This is up to you, most insurers start at 5 years and go to at least retirement age, 68 in the UK. If it’s for you and you aim to sell up in 10 years, or have a 10 year business loan or business plan then 10 years is sufficient. Your other keyperson may have been there for years and probably will never leave. If you take a policy out and the person leaves or you no longer need this cover, you can cancel the policy at any time, without penalty. There is no cash in value either, so it just ends.
Straight away usually! We may need to check any medical disclosures you have made, by calling the medical underwriters to see if they are likely to increase prices, so we can give you accurate quotes.
This can be done the same day. There is a specific on-line medical form for each of the insurers. We would go through the most suitable one, once you are happy with one of the quotes. We go over the relevant form on the phone and usually it takes 10 minutes, if you have no major medical issues. (Can be a bit longer if you have a medical condition as the insurer will ask a few relevant questions so they can give you a fair monthly cost for the cover.) The insurers may need to write to your doctor for information on certain conditions or depending on the level of your cover and your age, you may need a nurse medical – which can be done in 15 minutes, at a time convenient to you, at your home or business address.
An example, based on a 30-year-old, healthy, non-smoker* for £100,000 Key man/key person Life and illness cover for 10 years is £16.91 a month, or 56p per day. Key man/key person life insurance would be £5 per month or 17p per day. *Figures correct with the best priced insurer as of 1st March 2023 Plans can be cancelled at any time without penalty within the chosen plan term
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Shareholder protection is for businesses with two or more shareholders. This policy protects you all if one of the shareholders dies.
A Relevant Life Insurance Policy is a term assurance plan available to employers to provide an individual ‘death in service’ benefit for an employee.