Protecting the director of a new start business
Scenario
A new client approached us having set up his own limited company in the last 12 months. In this scenario this client was 100% shareholder within the business. Having lost all previous benefits he had when he was an employee, he wanted to understand the options available to him to protect his business in the event he ever became seriously ill, and also understand what options were open to him to protect his family now that he no longer has death in service benefit through an employer. He had a set budget to work with and would ideally like cover that can be set up and paid for through the business.
Recommendation
a benefit in kind, so our new client was very happy with this option.
As our client in a sense is the business, if he was ever unable to work due to a serious illness the business would likely have to cease trading very quickly. To protect against this we set up a key person policy which pays out to the business in the event our client suffers a serious illness or passes away. This allows for business continuity and provides him with a cash injection to the business that could allow him to bring in someone else to help to run the business while he recovers from a serious illness.
Outcome
Our protection specialist was able to provide our client with protection for his family and his business all with his fixed budget. The relevant life policy was set up with his wife being the trustee and beneficiary of the policy which means she can deal directly with the insurance company to help to ensure a fast payout in the event of a claim.
The Key Person Policy (previously known as Key Man Cover) gives our client peace of mind that he is now protected in the event he suffers a serious illness or passes away, with the policy ensuring a lump sum pays out into the business to help deal with the upheaval of the sole director being seriously ill and unable to work, or passing away.
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