Is the financial security of your business future proof? Call us for a financial protection review to mitigate risk and help you plan your business future with confidence.
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Why does my business need a protection review?
Business owners often juggle many different roles, making it difficult for them to find time to focus on current and future financial planning.
As a business owner, it is your responsibility to make essential decisions regarding the company’s direction and to put in place financial plans to ensure continual growth and future financial security.
You must comprehensively understand your company’s current financial position to ensure that you are covered for any unexpected events that might undermine your business’s future success.
We can help you by undertaking a financial review of your company and will make recommendations as to which areas you may need to address. We will highlight any opportunities available to you which you may not be taking advantage of.
As a part of your financial plan, we will review the following areas:
- Business continuity planning
- Key person insurance, life insurance and shareholder/partnership protection
- Succession planning
What is shareholder and partnership protection?
Businesses can face many challenges and difficulties during the day to day operations. However, the loss of a shareholder (due to death or critical illness) can leave a company without direction and struggling to recover.
Without a well-funded plan, should a shareholder die, their company equity would pass to their estate. Part of the business could be left with family members who may have little interest in the company’s future direction and could sell the shares to a third party.
Shareholder Protection will provide a business with the cover it needs should the worst happen. Helping avoid unnecessary disputes and ensuring that the company can return to normality with minimum delay and disruption.
How does it work?
- Shareholder protection is an insurance plan put in place and agreed upon by a company and its shareholders.
- The plan pays out a lump sum to cover the value of the deceased or critically ill shareholder’s share of the business. The other business shareholders can use this lump sum to purchase these shares.
- We tailor different plans to cover each shareholder, considering each owner’s share of the business and associated value.
- The plan will ensure that the deceased or critically ill shareholder’s family or partner will receive the true value of the shares.
Over the years, you have worked extremely hard to make your business a success and ensure that your family has a secure and comfortable life. You are now planning your retirement and, as a result, are thinking about a Succession Plan.
Providing your children and loved ones with gifts such as cash, property, and assets can be a tax-efficient way to reduce the size of your estate for inheritance tax purposes. Or maybe you would like to set up a charitable trust to help support causes that you care about once you are no longer here.
Whatever your plans, it is important that you receive the right advice to ensure that your family are secure and taken care of and that you have a succession plan tailored to your specific situation and wishes.
We can work with you to create a plan that is tailored to you and your loved ones, please call us.
Key Person Insurance
As much as no one wants to think about it, death is a fact of life. As well as the personal impact, they bring uncertainty for your business. This could mean customers losing confidence in the business, banks calling in loans or suppliers asking for payment upfront.
However, whilst people are a critical asset many business owners only think about insuring their premises, plant or equipment. Even though it’s much harder to replace an essential member of your team or business. That’s where Key Person Insurance can help.
This type of cover protects your business if you lose a key person due to death or disability. It helps you to keep the business going and fund a replacement should the worst happen.
Business Loan Insurance
Business loan protection gives you peace of mind that business debts are covered if a business owner, director or key person dies. Many businesses take out loans to start up a company or to expand their operation. The ability to repay the loans often rests on a few key people. Insurance helps to pay an outstanding loan if any of those key people were to become critically ill or die.
Most types of business loan can be protected, including:
- Commercial loans and mortgages
- Venture capital loans
- Director’s loans
- Personal guarantees
How will my business benefit from life insurance cover?
Relevant Life Cover is a tax-efficient life insurance policy that gives death-in-service benefits outside of a registered group life scheme. The insurance is set up and funded by the company, and is a tax-efficient means of providing life insurance to a business owner.
High-earning business owners and employees who are close to exceeding their pension lifetime allowance can benefit from Relevant Life Cover. That’s because the benefits from registered group life schemes are counted towards the pension lifetime allowance. However, the benefits from a Relevant Life Cover policy are not.
Why choose Vision?
We centre your business protection around you and your business
We are completely independent so can access the whole of the market
We don’t baffle you with jargon. We prefer to be straightforward and upfront
We’re a boutique family firm – you only deal with a small team dedicated to you
We provide a completely free initial protection review
We’re flexible and provide options for meetings face to face, via phone or virtual
Direct access to your personal advisor
It only takes a few seconds to send us your details. Book a free protection review.
Vision Independent Financial Advisers explain things very clearly so that we are never in any doubt about our financial situation. I have recommended ‘Vision’ to many of my colleagues who have taken up consultations and have been very pleased with the outcomes.
Since learning of a pension i had long forgotten about Vision Advisors Limited has looked after me with help and email`s regarding my transfer and what stage i am at, Nothing is too much trouble, a brilliant team to go with.
Steven & Jenny
Our financial adviser talked us through all our options and gave us time to digest it all and come to our own decision. The whole process was made very easy, and he did all of the research. We will definitely continue to use Vision IFAs in the future.
Phil & Brenda
Our financial adviser provided us with a complete planning package after a one to one conversation which was friendly, knowledgeable and professional. Planning with Vision allayed our worries and fears about the future and has been an extremely positive experience.
Great advice from David and team on our pensions savings and all financial advice. David is a pleasure to deal with always available for advice very professional and reliable.
Get help with the most common questions our team of independent financial advisers get asked.
Can’t find an answer?
What is a financial business continuity plan?
A financial business continuity plan outlines the systems and processes that you have in place to ensure that your company can continue to operate effectively when facing potential threats and unplanned disruptions to daily business operations.
The plan will cover contingencies for the protection of business and its assets, including your staff and business partners. Financial business continuity planning and the associated business protection insurance will help ensure the long-term financial security of your business during difficult times.
What is key person insurance and why would my company need it?
Key person insurance would protect your business against the potential loss of profits if a key employee were to become critically ill or pass away.
This life insurance and critical illness cover are taken out by the business, on the life of an employee, who is crucial to the ongoing operations and profits of the business. If a key member is diagnosed with a critical illness or dies, the policy pays out directly to the company so that business profits can be protected, and the company can continue trading as usual.
How would I identify a key person?
If your company’s reputation or financial viability are directly linked to a particular employee, either through their reputation, unique skills or specialist knowledge, then they are a key person. If the loss of this person would have a direct impact on the operation and financial success of your business, then you should consider key person insurance.
For example, key people could include:
Research and Development Specialists
Sales Managers and Executives
More information on Key Person Insurance and why you may need it, can be found on our article Protect Profits with Key Person Insurance.
How do you assess my business protection needs?
In assessing your business protection needs, it is crucial to consider the impact the loss of a key person, partner or shareholder would have on the business. In order to do this, we may ask you some of the following questions:
- What would happen if your top salesperson was to suffer a critical illness
- What impact would that have on revenue
- Would the business have enough funds to survive until a replacement was found
- What would happen if one of the partners in the firm died
- Would the remaining partners have enough funds to buy out the deceased’s partner’s share from their estate?
What are the tax implications of business protection?
The tax implications of business protection will depend on the type of arrangement.
- It is unlikely that the business will get tax relief on the premiums where the life assured is a significant owner of the business.
- Tax relief is possible if the life assured is an employee and the plan is for a short term (less than 5 years).
- Plan proceeds paid to a limited company or limited liability partnership are likely to be taxed as a trading receipt.
- If the plan has been taken out by a partner on the life of a key employee and written in trust, the plan proceeds will, generally be paid free of tax.
- Premiums paid by a limited company for plans written under a trust will usually be regarded as a trading expense, however, they will be taxed as income on the shareholder.
- Premiums paid by a limited company under a company share buy back arrangement will not get relief but the shareholder will not be taxed.
- Premiums paid for partnership cover will not receive tax relief.
- If a partner or shareholder pays the premiums, this would be paid out of their pay after tax and would not attract tax relief.
- Generally, the proceeds of the plan would be paid free of tax.
- Premiums will not attract tax relief.
- Plan proceeds will generally be received free of tax as a capital receipt.
What type of businesses can you help?
We understand that different businesses need different types and levels of protection. We can offer solutions to businesses of all sizes and types – including limited companies, sole traders, partnerships, and limited liability partnerships (LLPs).
What are the Differences between Relevant Life Cover, Key Person Insurance and Shareholder Protection?
It can be confusing to understand the many types of insurance to protect your business and its people. However, the key difference is whether the insurance benefits the individual or the business.
Relevant Life covers an individual and is set up to help their family. If the insured dies, their family or dependants can cover living costs and bills.
Key Person and Shareholder Protection insurance are for the benefit of the business. They help a firm to continue running if an important director or employee dies or has a critical illness.
Shareholder protection also ensures that there is a succession plan for the company ownership to avoid disputes and allow the business to continue running smoothly.
How Does Shareholder Protection Work?
Shareholder protection is an insurance plan agreed by the company and its shareholders.
It covers the purchase of shares if one of the shareholders dies. The plan pays out a lump sum to cover the value of their share of the business. The other shareholders use this to buy the shares of the deceased co-owner.
Different plans are available to provide life cover for each shareholder. A key factor is agreeing the value of each owner’s share of the business so that the payout amount is appropriate compensation for the shares.
In addition to the shareholder protection plan, each shareholder should also write a will. This is so their family or beneficiaries receive the value of their shares.
How we help
Personal / Business
If you feel overwhelmed at the prospect of planning your retirement savings, don’t worry. We are here to help.
We advise on a range of tax-efficient investments, creating the best-tailored plan for you and your family.
We help to safeguard your family’s financial position against the unexpected and protect the lifestyle you enjoy.
Depending on the way your scheme is administered, as a business you can benefit from substantial savings.
We provide support to help you mitigate risk and let you plan your business future with confidence.
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