Sustainable Investments, Lasting Value. Silvinvest: A Beautiful Investment in Oudh - Key Facts

Sustainable Investments, Lasting Value. Silvinvest: A Beautiful Investment in Oudh - Key Facts: Agarwood Forward Purchase Agreement: Key Facts Why Agarwood has a widespread and varied use going back thousands of years and was record...

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Key Man Insurance - Benefits to Business

When a key person in a business dies it can have a devastating financial effect. You can help safeguard your business against the death or critical illness of a key person with key person protection.

• What is Key Person Protection?
  
  Put simply, Key Person Protection (also known as key man insurance or key person insurance) is a business insuring itself against the financial loss it would suffer if a key person in their business died (or suffered a critical illness if chosen).
• How does Key Person Protection Work?
  
  Key Person Protection is a life assurance or life assurance and critical illness cover policy taken out to cover the life of a key person within your business. The policy is owned and paid for by the employer, so any pay out is payable to the employer.

Why do I need Key Person Protection?

The loss of a key person in your business could have a severe impact. The business could suffer badly, with sales and profits falling and increased workloads for the remaining staff.

Key Person Protection pays out a lump sum on the death of the insured key person. It is paid as a lump sum and could significantly help the business to recover. The proceeds can be used to replace lost profit or finding and hiring a replacement.

Who is a Key Person?

A key person is an individual whose skill, knowledge, experience or leadership contributes to the financial success of a business. A key person could be one of a number of people within the business, such as the:

• Chairman
• Managing director
• Marketing manager
• Computer specialist
• Sales manager

Anyone whose death could lead to financial loss for the business through:

• Loss of profits
• Having to recruit or train a replacement
• Important business contacts lost of the key person is not there to maintain relationships
• Customers and suppliers losing confidence in the business

How do we prove an employee is a Key Person?

For a business to insure one of it’s employees it must be able to demonstrate that it will suffer a financial loss as a result of death, terminal or critical illness of that employee. Most small and medium sized business will have one or more employees who are crucial to their continued success.

Who pays the premiums?

• Where a company, LLP or Scottish partnership is the owner of the life policy it pays the premiums
• Where the policy is for a partnership, the partnership would normally pay the premiums.
• Where the policy is for a sole trader, the sole trader as the owner of the policy would pay the premiums.

What type of policies are available?

You can choose between a life cover policy or a life and critical illness cover policy.

Your decision depends on what circumstances are involved and the events the business want to insure the key person against. The effect of suffering a critical illness can have the same devastating effects on the business as the death of a key person. Therefore, life and critical illness cover may be a suitable option.

What happens if a Key Person leaves or retires?

If a key person were to leave or retire before the end of the policy a limited company, LLP or Scottish Partnership could do one of the following:

• Stop paying the premiums and the policy would end
• Continue paying the premiums until the end of the term and in the event of claim the business would receive a capital sum
• Assign the policy to the key person who would then become the legal owner of the policy and could continue paying the premiums.

Traditional English Partnerships and sole traders, a have different options if the key person leaves or retires. 

For further Information, please feel free to contact Ian Harlock cert PFS

Relevant Life - Dear Mr U K Businessman

Take advantage of tax benefits through your life insurance

You have a successful business that gives you and your family a rewarding lifestyle that you have worked hard to achieve -so you will want to protect it. Did you know that as a director of your own company, your life cover could provide tax benefits while giving you the peace of mind that your family would be provided for should the worst happen?

If you currently pay for your life cover from your own bank account you will be paying out of post-tax income, and if you pay for it from your business account you will probably be taxed on the payment as if it were income. Larger companies avoid this tax by providing life cover for employees through a registered group ‘death in service’ scheme.

You can take advantage of the tax benefits available to larger companies by taking your life cover out through a ‘relevant life policy’. These can be written on an individual basis so are available to all companies no matter how small, meaning you could also provide life cover for your employees – even if you only have a few.

Relevant life policy tax benefits are available to both the employers and employees:

• Potential tax relief on the premiums for the employer if the local inspector of taxes agrees
• No tax assessment of premiums on the employee as a benefit in kind
• Premiums are not subject to National Insurance payments for employer or employee
• Benefits are usually payable tax free to the employee’s dependents
• Benefits do not count towards the lifetime allowance for pension purposes

As your potential financial adviser, I would be happy to tell you more about relevant life policies. Please call me on 07852 576301 to find out how a relevant life policy could work for you.

Yours sincerely

Ian Harlock
Mortgage & Protection Consultant

Family Mortgage Springboard Via Barclays Woolwich

Barclays is offering a new ‘Family Springboard’ mortgage which will give first-time buyers the chance to snap up a deal equivalent to 95 per cent Loan-to-Value (LTV) at 4.69 per cent.

The mortgage, fixed for three years, does however require parents or other family members to tie down 10 per cent of the purchase price of the property into a connected savings account until the fixed rate period ends, so the true deposit laid down is 15 per cent.

The new offer comes as the Government's £80 billion Funding for Lending scheme continues to fuel a mortgage price battle, which is helping bring new products and lower rates for buyers.

With the Family Springboard mortgage, someone buying a home at £160,000 would need to save £8,000 for a five per cent deposit and the family would need to put £16,000 into a savings account.

The savings account pays base rate plus 1.5 per cent. At the moment, this would mean a rate of two per cent, which is equal to the current best buy instant access rate available.

With savings rates this low, family members may be more tempted to help their children or grandchildren get a foot on the property ladder by stumping up the cash 'guarantee'.

Barclays will give parents their money back with interest when the fixed-rate period comes to an end, provided that the mortgage payments are up-to-date. After the three-year period, the mortgage will become a lifetime tracker at a rate of 3.99 percentage points above base rate. The deal also carries a £499 fee. From the buyer's point of view, the Barclays product is a cheaper way to borrow than more straightforward mortgage deals.

Melton Mowbray Building Society has a 95 per cent LTV offer for first-time buyers, without the need for family members to tie-up money in a savings account for security. But this comes with a higher 5.49 per cent rate and £998 fee.

But if first-time buyers are able to save a 10 per cent deposit – or are given the extra 5 per cent they need by family members - they could grab a cheaper rate with the Yorkshire two year fixed account, detailed in the purple box below.

Typically, first-time buyers need to raise a 20 per cent deposit to get on the property ladder. For an £160,000 home, this would equate to £32,000.

According to the Council of Mortgage Lenders (CML), only a third of first-time buyers in recent years have bought their home unassisted and the average age of those buying a home for the first time has risen to 35.

CML figures also show that lending to first-time buyers has reached its highest point since 2008, but it still way off the figures seen in 2007. In 2007, 308,400 first-time buyers obtained a mortgage, compared to 175,700 last year.

For further information please  contact Ian Harlock (Financial Adviser) on 07852 576301

RELEVANT LIFE POLICIES – PROTECTION OPTIONS FOR KEY EMPLOYEE’S

RELEVANT LIFE POLICIES – PROTECTION OPTIONS FOR KEY EMPLOYEE’S

A stand-alone single life policy is an alternative way for employers to provide death-in-service benefits to their employees.

The policy provides a lump sum benefit on the death of

an employee outside of a registered group life scheme.

What are the benefits?

• The benefit won’t form part of the employee’s lifetime

pension allowance.

• The payments made won’t form part of the

employee’s annual allowance.

• The payments employers make aren’t subject to

income tax because they’re not normally assessable

on the employee as a benefit in kind.

• These payments can be treated as an allowable

expense for the employer in calculating their tax

liability, as long as the local inspector of taxes is

satisfied they qualify under the ‘wholly and

exclusively’ rules.

• In most cases the benefits are paid free of

inheritance tax – provided the benefits are payable

through a discretionary trust.

How do I apply for a relevant life policy?

You can apply for a relevant life policy using our experience and resources. The plan must be written on a ‘life of another’ basis with the employer as the plan owner and the employee the person covered.