Your Key Man V’s Your Photo Copier

Posted on 08/05/2013 by The Key Man Expert

Your Key Person V’s Your Photo Copier

Man V Photocopier

A photo copier can be the hub of the office. Many a time in my working life have I had conversations/business meetings/other around the photocopier? A company which uses a lot of paper will need a photo copier and without one your company will not be able to photo copy anything. What does that mean for your company? Some companies, such as printing companies need a photo copier. Its simply is the key man within the company. But who operates the photo copier? I am joking of course, but in reality most companies do insure their photocopier but do not insure their key person.

What problems can occur when losing a key person within a company due to illness or even death? We have had a few calls and enquiries over the years from companies who have already lost a key person. Their normal reaction has been “thank god we had key man insurance”. Key person insurance of is a cost to any company and depending on age and amounts of cover it can work out quite expensive especially when you add critical illness. But then it’s very difficult to attain the costs to a company of losing a key person. Sometimes companies are 100% built around one man. Maybe he has the main idea and all the know-how. In these companies key man insurance should be extremely high on the list. But unfortunately companies seem to be more interested in insuring their office fax machine rather than the income of the company. Of course insuring a person doesn’t always pop into peoples thoughts. Companies simply do not look at the possibility that their key man might die.

Your employees will die, it’s just a case of when.

When do you plan to die? Well if you are not sure of the answer then I’m sure you don’t know when your employees are going to die either. You can’t plan these types of things. With the photocopier of course you can, and you can get a new one in before it happens. You could of course do this with your key person as well, but people are just not so replaceable. While I am writing this blog, I am also listening to Talk Sport and the headlines are all about Sir Alex Ferguson Retires (Loss of a key person?) I don’t know if he was insured, but here is a fantastic example of a key person. What would Manchester United have achieved without Sir Alex? I’m certain not as much, and with the loss of this key man I hope not so much in the future! #AFC

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What is a relevant life policy?

Posted on 24/01/2013 by The Key Man Expert

Yes some people may be wondering, what is a relevant life policy and what a strange name for a life insurance product. But if you look deeper you may find that a relevant life policy could help you make huge savings.

Relevant life insurance is a new kind of business protection that allows directors to arrange their personal term life insurance through their company. A relevant life policy can only be a life only policy and cannot contain any other benefits such as critical illness or income protection. Much like a death in service, a relevant life policy will allow owners of companies to offer life insurance to their employees in a tax efficient way. Relevant life is particularly beneficial to small businesses and higher earning individuals. Small businesses will often find that group life providers will not provide cover for companies with less than 5 employees. A relevant life policy can be taken out on a single life assured bases which offers an alternative to death in service. Group life insurance schemes are not always good for high earning individuals or employees, as they fall under pension scheme rules. A relevant life policy is a tax efficient way of benefitting from a lump sum benefit without the lump sum counting towards the individual’s life time pension allowance.

Tax Benefits of Relevant Life Insurance
Income tax and national insurance are not payable on relevant life premiums.
Premiums do not count towards the employees annual pension allowance
Employers may be able to deduct premiums as a company expense
Benefits are paid through what’s called a discretionary trust avoiding probate delay and usually free of inheritance tax.

If you are interested in a relevant life policy or getting a quote then please give one of our advisors a call and we can discuss the possible benefits to you and your employees.

We use a range of insurance providers and their products could be more suitable for your company. These articles are for information only and does not constitute as financial advice in any way.

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Variations of Key Person Insurance

Posted on 30/10/2012 by The Key Man Expert

Business’s looking to take out a key person insurance need to make sure they understand all the various options available. Other than straight forward key man life insurance there is also income protection key man insurance and critical illness that you can bolt on. You can see a brief outline below but for more information on different types of key man insurance click here.

Key Man Life Insurance

A key man life insurance policy is much like a normal term life insurance plan apart from the beneficiary is a company rather than the life assured. The company will own the policy, pay for the premiums and receive and benefit from a claim. The premiums are driven much the same way as a normal life insurance policy with age, sex and smoker status all taken into account to come up with a cost.

Critical Illness Insurance for the Key Man

Critical illness insurance is often bolted on to a key man insurance policy. A critical illness policy will pay out a lump sum amount of money on the diagnosis of a critical illness. Any claim must meet the definitions of critical illness set out by the insurance company it is placed with. All UK insurance providers who offer critical illness have to abide by the ABI (Association of British insurers) in order to call their policy critical illness insurance.

Income Protection Key Man Insurance

Income protection is a policy which will pay out a monthly benefit if the key man has an accident or illness which keeps them from working. There is a minimum deferred period to all income protection policies of 1 month. This can be increased through underwriting. Income protection key man cover is often taken out alongside a life and critical illness key person insurance.

Different providers offer different cover so its important to check the key facts for each. You can check provider details here.

For further information you can check out the blog www.mykeymaninsurance.com/blog/

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Keyman Insurance Business Risks

Posted on 30/10/2012 by The Key Man Expert

Keyman Insurance comes in many forms. Anyone from a director to a sole trader should be looking at their business risks. It may be a case where the company does not fully understand the risks involved with not having the cover. If you would like to see more about the various types of cover then click here to go to an excellent key person insurance source that explains in detail the various policies.

The UK Government is pushing for more lending to small and medium size businesses and are also pushing start up companies and are trying to make it more easier to start a business with business loans and other options of finance. However, all of this is promising for small to medium businesses but they all require Keyman insurance. The Government and the banks acknowledge the importance of the cover and most lenders make it a condition of the loan to take out a suitable key person insurance policy.

It protects the lender against losing there money due to the key person dying or not being able to work. If they can sufficiently cover this risk; then they are more likely to lend and therefore help the over all market conditions. If you think you may need key man insurance, the likely hood is you do. We strongly recommend you contact an independent Key Person Insurance specialist who would be able to guide you through the maze that is business insurance and find you the most suitable product at the best price. To ensure you obtain the best price, you should make sure the adviser you are using is whole of market and isn’t tied to any particular provider.

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Key Man Risks – Why Take Them?

Posted on 08/10/2012 by The Key Man Expert

Answer the below questions.

Is your company successful?
Does your company rely on certain people to run it?
Would your company struggle to make profits if it lost one or two certain people?

If you answered yes to the above questions then you really need to be looking at taking out key man insurance. You would also be correct in your assumption that most directors and business owners would also answer yes to most of the above. That’s because most companies should have the cover. Many UK companies and directors only think about key person insurance once they have lost someone. People tell them you should have taken out key man insurance. By this time obviously it’s often too late.

It’s quite easy to work out who in the company is key. Think about how your company works. Do you rely heavily on a website? Is your web developer therefor your key person? Do you sell things? Is your key person a sales man or woman? It could even be your PA or shop manager. Someone who knows the business inside out. What would you do if they die tomorrow? Would your company lose money? Would you be able to replace that person easily?

We have spoken to numerous companies who have called us after losing a key person. They realised the struggles they went through and now need to make sure everyone is covered. There are obviously costs for key man insurance and you can get a quote from our site. It’s not always cheap either. Depending on the life assured it can be quite expensive. So it really depends on how much that person is worth to your company. If that person brings in 90% of your profits then it’s probably worth paying. When doing the calculations its quite easy to see that its probably worth it. Remember you are probably paying out for numerous other insurances that are not important for the success of your company.

Of course a key man insurance policy will cover the life assured if they were to die but there are other types of cover that you can add to the policy. We will be talking about the variations in our next post.

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Life Insurance Price Rises

Posted on 17/09/2012 by The Key Man Expert

Nows The Time To Get Your Key Man Insurance

If you are looking to take out any kind of life insurance then you need to act fast. From the 21st of December 2012 the new laws of gender pricing for life insurance come into force meaning women will be priced the same as men. Whereas females currently enjoy premiums quite a bit cheaper they will soon be priced the same due to European laws. This will results in life and critical illness premiums rising by about 15% and slightly less for income protection. This of course will affect all business protection policies just the same as normal life and critical illness. Men may see a slight drop in prices for life and critical illness but will see a rise in income protection. It’s unclear of course of exactly how this will work as different clients with different circumstances will be priced differently and of course you will also find that prices will vary between providers.

From January 2013 most life insurance providers will also be hit by the new laws regarding tax. This basically means that the providers will be asked to pay more tax to the treasury having the knock of effect of price rises to the customer. Its predicted that these rises could be as much as another 10%.

This double whammy price rise will hit all people who take out cover after these dates, seeing prices of up to 25% higher in January than prices now. Anyone who currently has a policy will not be affected.

MyKeyManInsurance.com are advising clients to take out polices before these dates and obviously guarantee the premiums for as long as possible. Please speak to one of our advisers for more information.

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Partnership Protection Insurance

Posted on 21/08/2012 by The Key Man Expert

Most key man insurance policies we arrange for people are for limited companies. But not all companies are Ltd and therefore we need to know how to cover a key person if the company is a partnership. With a Ltd company the business will actually be the owner of the policy. This means in the event of a claim the business will receive the monies. A ltd company is its own entity and therefore can own things. Unlike a partnership which cannot.

So How Do We Set Up Partnership Protection

Basically with partnership protection each partner will own the others policy. When there is more than two partners the beneficiaries are normally sorted out through a trust. If this is for shareholder protection then of course a cross option agreement must also be in place.

Limited Liability Partnerships can be handled much the same way as a limited company as it can own the policy.

Actually a partnership is often more in need of key man insurance than a ltd company. Partnerships tend to be smaller and are often just two people. Therefore if one person dies 50% of the workforce has gone. This person could even be responsible for 100% of the profit. So small companies are sometimes more likely to be hit harder when a person dies or becomes critically ill.

Partnership protection can be taken out as a stand-alone life policy or with critical illness attached. As like any other key man insurance it can be taken over any term as a level term policy or as a decreasing. Speak to one of our advisors for more information on partnership protection.

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Shareholder Protection Insurance

Posted on 10/08/2012 by The Key Man Expert

As companies become bigger and more profitable the shares within a company become more and more valuable. All companies can have shares and shareholders, from a small partnership to a large blue chip business. Much like key man insurance, shareholder protection is often over looked with many companies not even knowing it exists.

So What Is Shareholder Protection

Its normally a life only insurance policy taken out by each shareholder to cover the value of the shares held by the other shareholders. Read it again slowly if you do not understand. The policy is taken out alongside a shareholder agreement which is sometimes called an option agreement. The insurance policy facilitates the agreements allowing the surviving shareholders to use the money from the pay-out to buy the shares back from the deceased wife or partner.

A very simple example

Let’s take a small partnership run by Peter and Paul. Both are 50% shareholders and the company is worth £100,000. Peter takes out a policy on Paul for £50,000 and Paul takes out a policy on Peter for £50,000. They both sign and agree to the option agreement. Paul dies leaving his 50% shareholding to his wife. The pay-out is then made to Peter who now has an extra £50,000. At this point the shareholder agreement can be triggered by either Paul’s wife or Peter. The option agreement will basically force the monies from the pay out to be used to buy the shares from Paul’s wife. Paul’s wife is now £50,000 better off and Peter is now 100% shareholder.

What happens if shareholder protection in not taken out?

There are a number of problems which companies and partnerships can find themselves if they have not taken out shareholder protection. If we look at the above example. Without the protection Peter may not be able to afford to buy the shares from Pauls wife. The company may not be worth anywhere near the amount it was due to Pauls death. Pauls wife may decide to sell the shares to someone else or possible decide to start sitting on the board and make decisions.

Many small and large companies have fallen fail to these problems and often go out of business when a shareholder dies. Companies without this kind of cover can find themselves in lots of financial problems. As well as trying to replace the deceased worker (who may have been key to the business) they now have the problem of trying to buy the shares back.

Of course companies vary a lot and the above example if a very simplified version of what is often needed. Please feel free to give us a call and speak to one of our qualified advisors to discuss this further.

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What Is Key Man Insurance

Posted on 06/07/2012 by The Key Man Expert

Key man insurance is a policy companies can take out to cover themselves against the financial losses that can occur when you lose a key person within the company. This can be through death, critical illness or incapacity. Many companies will overlook key man insurance or don’t even know there is such a thing. Obviously insurance is something that all companies have to take out for various equipment and machinery. Companies also normally take out some king of indemnity insurance to cover any mistakes or injuries that can occur within the office. But far too many companies within the UK forget or do not think to take out a key man insurance policy.

So How Do They Work

Key man insurance policies work much like straight forward life insurance and critical illness. The underwriting process on the life assured is the same. To get quotes on key man insurance you will need to give the life assured sex, date of birth and smoker status along with the amount of cover and term. This will then allow the broker to produce quotes. The main difference between a key man insurance policy and a normal term life or critical illness is that the owner of the policy is the limited company. The company pays the premiums and will be the beneficiary in the event that the life assured dies or becomes critically ill. Of course with the critical illness they will need to meet the specified definitions in order for a claim but this is something we will discuss in another blog post. Once a successful claim is made the company will receive the lump sum and can then use this money as is needed.

When getting a quote for key man insurance it’s always a good idea to speak to a specialist whole of market broker. This will ensure that you are speaking to someone who knows how to set up a key man insurance policy correctly but also someone who has access to all the insurance companies who can underwrite a key man policy.

We at mykeymaninsurance.com are whole of market brokers and have 7 years expertise in all business protection type insurance’s. Along with key man cover we also deal in shareholder protection, business loan insurance and relevant life insurance.

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Whats This All About

Posted on 03/07/2012 by The Key Man Expert

Over the coming weeks and months we will be looking into various different types of business protection and how companies can financially secure themselves against the loss of a key person. We will be giving information on all the different insurance companies available for businesses as well as pointing out the differences. We will also be giving updates and information on any news of business protection and key man insurance.

Check back here soon for undates.

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