Death:
Business protection
If you run your own business (including holding shares in your own company) you may need additional insurance to ensure the business can continue after your death.
In addition to a correctly drafted shareholder or partnership agreement you may also need insurance to provide a cash sum to help the business cope with the financial effects of losing a key figure until he or she can be replaced. The insurance does not have to be limited to the proprietor of the business but it can be in respect of any "key" employee.
Where the key person is an employee or director of a company, the company insures his or her life for its own benefit.
Where the key person is a partner in a business, that person's life can be insured in trust for the other partners. (If it is a limited liability partnership, the partnership can take out the policy as it is a legal entity in its own right, unlike a "normal" partnership)
Key person insurance is a complex area and professional advice is required regarding the appropriate sum assured, suitable policies and the tax treatment of the premiums paid and benefits received. You can read more about business protection in the Your business section and in the literature below:
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Where next?
Within Inheritance tax planning…
- Exemptions and reliefs
- Making best use of your nil rate band
- Life assurance and pensions
- Deed of variation
- The family home
- IHT efficient investments
General…
