Protecting People In Your Business

Protecting People In Your BusinessThe old age adage that a business is only as valuable as its employees is an important one to have to remember when it comes to insurance. Protecting people in your business is essential and this guide to the financial protection for the people that make your business success is sure to help you.

A companies workforce is one of the most important investments it will make & choosing the right insurance package is a crucial way of protecting that investment. Changes to your workforce can have dramatic effects on a business’ ability to operate, from removing key expertise to inadvertently damaging important relationships.

A tailored business insurance policy will offer both the wider business and the individual employees financial protection in the face of unforeseen occurrences.

Protecting People In Your Business & Your Operations

The first consideration is ensuring that the organisation can maintain its operations in the face of major changes to its workforce.

Protecting People In Your Business – Key Person Insurance

While your employees as a whole are important, there may be one particular individual who is an important cog in the bigger machine. This person may be the organisational, creative or motivational centre of your business operations or may even have a privileged relationship with your businesses key clients.

Either way, losing them because of critical illness or death could have major effects on your companies ability to generate income. Business key person insurance is a mix of critical illness, life assurance and income protection which aims to allow a company to continue trading in a period of uncertainty and financial pressure.

Business key person insurance provides cover for:

  • loss of company profits over the period of time it takes to find & fully integrate a replacement
  • training and recruitment costs
  • income paid to an individual if they are unable to work due to injury or critical illness (plus the costs incurred from temporarily replacing them).

Identifying Key People In Your Business

Each company has a unique mix of people & the fulcrum could be anyone. Some people come to have more importance than their job role would suggest while others have a much higher level of technical understanding than the rest of the workforce.

Some examples of potential key persons:

  • a sales person who has created a successful relationship with your business clients
  • a specialist technical expert
  • managers or directors
  • the founder (who may be the most competent member of the team or main source of goodwill).

Talk to us about your workforce today.

Protecting People In Your Business – Shareholder Protection

The death of a company shareholder can have many wide-ranging effects, potentially impacting both the financial health of the company as well as the deceased shareholders family.

The deceased shareholders family will become entitled to their shares and while they could step into their vacant position, they may wish to sell their shares. It may also be in the remaining shareholders’ interest to buy out the deceased shareholders shares in order to retain a degree of stability for the business.

Business shareholder protection insurance policies can provide the business with money to buy these shares. There are three main types of shareholder protection policies:

  • life of another – 2 shareholders apply for a shareholder protection policy on the life of the other
  • company share purchase – the business itself purchases the shares of the deceased shareholder
  • own life – each shareholder takes out their own individual policy that is then held under a business protection trust.

There many potential benefits to this kind of business protection insurance:

  • firstly, gives the promise of stability to a business plan
  • secondly, guarantees support for the family of the deceased
  • finally it can also cover critical illness.  

We can provide advice on your ideal cover.

Protecting your business employees

The second strand of insurance for your workforce is offering your employees a range of benefits that can include various insurance policies.

INCOME PROTECTION

For the average person,  most people, losing the ability to earn a wage for a long period of time is a worrying idea. Without a regular wage, the costs of living can quickly spiral out of control.

Income protection insurance will provide an income to those who are unable to attend work due to sickness or injury. These insurance policies may cover a person until they either retire or return to work. This type of insurance policy does not include redundancy.

Income protection insurance is usually taken out for a percentage of your salary, generally ranging from 50% up to 70%, with these payments being tax-free. There is usually a short period between the time when the claim is made and the time when the benefits start to be paid. Increasing this period usually results in lower insurance premiums. 

Critical Illness

Income protection insurance gives you an ongoing monthly income, whereas critical illness cover provides a tax-free lump sum if you are diagnosed with a particular medical issue.

The range of conditions covered varies between different insurance companies, but the payout is always made as a lump sum to the employee. This money can then be spent however, they choose.

There is a benefit for employers as they receive corporation tax relief on any premiums they pay. Class 1A NI contributions will still be payable.

Private Medical Insurance Provisions

Private medical insurance schemes allow your employees to claim back some, or all of the costs, of private medical treatments.

The actual list of treatments covered varies between insurance providers, but most of the following are usually covered:

  • medical inpatient tests
  • surgery
  • hospital stays and nursing care
  • a range of outpatient medical tests

Group Life Insurance Provisions

Group life insurance is more commonly known as ‘death in service benefit’. This type of policy offers a payout to the employees family should the employee die.

The payout consists of a lump sum payment and is normally calculated based on a multiple of the employee’s salary. Providing it does not exceed the lifetime tax-free allowance, then it will be a tax-free payment.  

Group policies cover all of the employees, with the level of cover and the premiums being dealt with by the employer.

Talk to our  West Kirby Financial Advisor, Wilmslow Financial AdvisorAltrincham Financial AdvisorWarrington Financial Advisor, Liverpool Financial Adviser, or Manchester Financial Adviser team about your benefits package today.

Choosing the right insurance cover for your business

Every business is a unique collection of personalities, skills & experiences, so there is no one-size-fits-all approach to protection.

To accurately work out the level and types of cover you are going to need and ensure you consider the following:

Analyse Your Threats

Any insurance plan should be rooted in the careful & thorough analysis. Conducting a SWOT (strengths, weaknesses, opportunities and threats) analysis will highlight the weakest points of your business.

Which teams or employees would cause the most disruption or harm if something should, unfortunately, happen to them? Are these people client facing or more important internally?

Do Not Over Insure

Being prepared is always a good thing, but being overly cautious may mean that you limit yourself in other areas. If you are paying out expensive premiums, you may have tied up valuable cashflow resources that could be better spent on internal training, marketing or product development.

Our Warrington IFA, Manchester IFAAltrincham IFAWilmslow IFA, Liverpool IFA or Knutsford IFA expert team can help you construct the right protection strategy.

Important information about this “Protecting People In Your Business” article 

The way in which tax charges (or tax relief, as appropriate) are applied depends upon a person’s own individual circumstances and may be subject to change in the future.

This “Protecting People In Your Business” document is solely for information purposes and nothing in this “Protecting People In Your Business” document is intended to constitute advice or a recommendation.

While considerable care has been taken to ensure that the information contained within this “Protecting People In Your Business” document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information.

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