How does business owner life insurance work?
Business owners life insurance plans differ from traditional life insurance policies because they aren’t meant to protect your family.
They help keep your business safe.
Have you spent your life building up a thriving company? Do you have a team of employees who depend on you for their income and their families financial protection? If that’s the case, it would be wise to take out business owner life insurance.
Most of the time, a business life insurance policy will be a term insurance policy.
The average plan lasts ten years, but you can choose a flexible term that matches your business needs.
You can choose to pay your premiums monthly or annually.
If you haven’t had to make a claim, your policy will end at the end of the term, and you won’t get any of the money you paid in premiums back.
But if you need to make a claim, the money will go straight to the business, not the business owner or a specific employee.
The money can only be used to keep the business going.
As part of any business owner life insurance policy, you should think about adding in a keyman insurance plan.
This policy will protect your business should something happen to one of your top people.
Most of the time, it might be your CEO or Managing Director. But the majority of your income could also come from your operations director or your best salesperson. Your head of IT might be crucial to keeping your business up and running.
If they died suddenly, your business would be protected by a keyman insurance plan. You could also protect your key person against critical illness, which would help protect your business if they got sick and couldn’t work.
Even though the policy is taken out on the life of your chosen key person, your business will hold the policy. Your business will pay for your premiums, and any payouts will return to your business.
Knowing how much cover you need for key people can be tricky. After all, you need to think about how much money your key person is worth to your business. It might not be enough to pay for them based on how much they are worth right now. You also need to think about the potential that they have to help your business grow.
At The Insurance Surgery, we have a team of experts who can help you understand everything about business owner life insurance and keyman insurance.
We know it can be hard to understand insurance. But with your help and support, we can get out our calculators and figure out how much financial protection your business needs.
During our conversations, we’ll discuss your business owner’s life insurance needs openly and honestly.
We’ll also check that you understand what the policy covers and how it works.
Please ask us as many questions as possible because running a business is hard enough.
You hire the right people with the skills you need to get the job done.
We hope you feel the same way about us.
You’re working with us to find the right business insurance policies for you.
You want to keep your business safe.
In just a short phone call, we’re confident it can be.
Who owns your business owner life insurance policy?
If your business owns and pays for a relevant life policy, your plan will need to be held in trust for your chosen beneficiaries from the very outset.
This trust will work in the same way as a personal life cover discretionary trust.
The purpose of the trust is to make sure that any claim is paid quickly to the business without having to wait for a will to be read and probate to be granted.
As the policy benefits of your business owners life insurance plan are outside of your personal estate, any payout is not subject to inheritance tax.
Like personal life insurance, your business will receive a payout on the policy if you were to pass away during the policy term, or you were to be diagnosed with a terminal illness with a life expectancy of less than twelve months.
Is a business owner life insurance policy tax deductible?
This can be a complicated question, and we always advise that you speak to your certified accountant or certified financial advisor to ensure that you are in line with legislation and HRMC rules.
In certain circumstances, relevant life insurance premiums can be a tax-deductible expense and they can save you up to 40% per year. They are not considered a P11d tax benefit, so they should not affect how much personal tax you pay.
But to make sure that we’re giving the right advice for your circumstances, please call us. We’ll chat through what this means for you, and we’ll make sure that you have everything you need including all relevant paperwork and documentation to give to your accounts team.
Who Is Eligible For A Business Owner Life Insurance Plan?
To be eligible for this particular life insurance plan, you must be a company employee.
This includes
Unlike life insurance policies created through a group business protection plan, you can move your life plan to a personal plan if you change employment. However, you might lose certain benefits in doing do. If you do have any questions about eligibility for business owners life insurance, or you want to know how easy it is to switch to a personal plan, please talk to us.
Our experienced advisors know the full details of your insurance plan and will be able to answer any questions that you have.
We promise to find you the right insurance provider
Because we have access to the whole-of-market, business owners choose us to help them find the best life insurance company.
This means we work with high street names, independent brands and insurers who only work with independent life insurance brokers like The Insurance Surgery.
We can focus on matching you to the right insurance company because we have access to more business owner life insurance policies.
We want to make sure that your insurance company always looks out for your best interests.
If we suggest a provider, it’s because we believe they’ll meet your needs.
Your business needs the best protection that can be found.
But it’s also important to us that don’t pay too much for your business life insurance and keyman insurance policies.
We know margins are tight, and every penny counts.
That’s why we focus heavily on getting the cover that you need. And with our relationships with insurance companies, we can check that your business life insurance is affordable, even for sole traders and freelancers.
Unlike life insurance policies created through a group business protection plan, you can move your life plan to a personal plan if you change employment. However, you might lose certain benefits in doing do. If you do have any questions about eligibility for business owners life insurance, or you want to know how easy it is to switch to a personal plan, please talk to us.
Our experienced advisors know the full details of your insurance plan and will be able to answer any questions that you have.
