Business protection entails protecting the business from the financial implications of a key person/Director being unable to work in the event of their death or long-term illness. For death, a lump sum can be provided to the business tax-efficiently to cover the loss of income arising from this and the costs of replacing that person.
Businesses may also wish to cover the lives of their major shareholders to ensure there is a payment to the remaining directors should one of them die. If sufficient cover is secured on the life of a deceased shareholder, it will provide the remaining directors with capital to purchase those shares to retain them within the existing shareholder base, rather than risking those shares being sold by a widowed spouse to an external party.
Such cover is also helpful to the widowed spouse, as it will offer them immediate cash in in return for the deceased spouse’s shares.
Many employers want to offer their staff benefits in addition to the salary and pensions they already provide. Further incentives are usually tax-deductible as a legitimate business expense, and can be in the form of: