Life insurance and other insurance solutions for Company Directors and Key Personnel
Directors and key personnel are the backbone of a company's success, bearing substantial responsibilities and risks. Securing comprehensive insurance coverage is vital to ensure their families and the business remain safeguarded. Discover how our tailored solutions can provide peace of mind while you fulfil your crucial duties.
At WeCovr, we specialise in offering insurance solutions tailored to high-responsibility roles like company directors and key personnel. We understand the importance of being a responsible leader, both at work and for your family's well-being. Our aim is to provide the necessary insurance coverage to support you in these roles.
Securing appropriate insurance shouldn’t be a source of stress or financial burden. We firmly believe that everyone in key positions within a company should have access to reliable and affordable insurance. It's about ensuring financial stability for your loved ones should the unexpected occur.
Our experience in assisting families with insurance matters spans several years. We recognise the significance of ensuring that your beneficiaries are adequately protected in the event of unforeseen circumstances, including injury, illness, or unfortunate outcomes.
Key Person or Relevant Life Insurance?
Key Person Insurance and Relevant Life Cover both fall under the umbrella of Life Insurance, yet what distinguishes the two? Despite initial similarities, they serve distinct purposes.
Both insurances are borne and funded by a business. However, while Key Person Insurance safeguards the business, Relevant Life Cover is designed for the benefit of the employee and their family. It's crucial not to conflate these coverages.
Why opt for Key Person Insurance? Every business has pivotal individuals whose illness or demise could significantly affect the company's continuity. This insurance is sought to ensure financial support for business continuity in dire circumstances involving key personnel.
Businesses might not solely acquire Key Person Insurance by choice; lenders or investors might stipulate its purchase to safeguard their interests in the company. Since it caters to the business's needs, payouts from this policy directly benefit the business. It doesn't substitute the earnings of the absent individual but aids in covering costs until their return to work. It could also assist in training or covering the replacement's salary for a period.
When Key Person Insurance is for business continuity, the premiums are usually tax-deductible as a business expense, provided they're on a non-shareholding employee's life, solely for the business's benefit. However, any payouts upon a claim will be subject to tax.
If the policy is bought to safeguard a loan, the premiums may not tax-deductible since they serve the lender's direct benefit. Nevertheless, the benefit is typically received tax-free. Consulting an accountant about the tax implications is advised, as they depend on the policy's purpose and setup.
How does Relevant Life Cover differ?
While Key Person Insurance mitigates business losses, Relevant Life Cover offers tax-free financial support to an employee's family upon their death.
Usually, directors purchase Relevant Life Cover to safeguard their families, but it's the business that bears the cost. Smaller companies might consider it if they lack the workforce for a Death In Service scheme but wish to provide some personal Life Insurance to their employees.
Obtaining Relevant Life Insurance through a business ensures high tax efficiency. Establishing a Relevant Life Trust often leads to tax-free benefits for beneficiaries. Additionally, corporation tax relief, income tax relief, and National Insurance relief can be availed by choosing Relevant Life Cover over personal Life Insurance.
The coverage levels between Key Person Insurance and Relevant Life Cover also differ. Key Person Insurance coverage depends on business metrics and an individual's significance to the business. Relevant Life Cover, however, is typically represented as multiples of salary and dividends.
Save up to 49% with a Relevant Life Cover compared to Private Coverage
Protect your loved ones and beneficiaries with a tax-free lump sum through a Relevant Life Policy. This policy, paid for by your business, ensures no benefit in kind tax and offers coverage up to 30 times your gross annual earnings.
A Relevant Life plan provides an affordable and efficient way for employers to secure life cover for employees or directors, benefiting the employee's family or financial dependents.
A Relevant Life Policy covers the benefit payable on death or upon diagnosis of a Terminal Illness (12 months or less to live). Additionally, there's an option to include coverage for serious illnesses like cancer, heart attacks, or strokes.
Tax Benefits of Relevant Life Policies
Under a Relevant Life Policy, there's no benefit-in-kind tax for the employee. Premiums are non-taxable, making it a valuable option for retirement and death benefits.
Eligibility and Usage of Relevant Life Policies
Any employee or director within a limited company, partnership, charity, or sole trader's employment is eligible. However, sole traders or equity partners themselves are not eligible for a Relevant Life policy because Relevant life insurance plans are not available where there is no employer/employee relationship. This policy cannot be utilised for business loan cover, business continuity, or succession planning.
A relevant life insurance policy covers the following types of individual:
- Employers seeking death-in-service benefits for a limited number of employees, insufficient for a group scheme setup.- Directors aiming to secure individual death-in-service benefits without taking out a scheme covering all employees.
- High-earning individuals, including directors, for whom death-in-service benefits do not contribute towards their 'lifetime allowance' (£1.073 million 2023/24).
Trustees, Beneficiaries, and Coverage Limitations
The policy will be held in a Discretionary Trust, ensuring no inheritance tax (IHT) for the estate upon death. Trustees can include other shareholders/directors or friends/family members, while beneficiaries usually encompass dependents like spouses and children.
The maximum cover varies based on age and income and insurance providers. For example, you may be looking at the following ratios:
- Up to age 35: 30 times salary
- Ages 36-50: 25 times salary
- Ages 51-60: 20 times salary
- Ages 61+: 15 times salary
Age and Coverage Limitations: Some insurers offer cover up to age 75, ensuring prolonged protection for you and your loved ones.
Secure Tailored Insurance for Company Directors and Key Personnel Today
Secure comprehensive and tailored insurance coverage suited to the unique demands of directorial or key personnel roles. Request a free, no-obligation quote today from WeCovr and ensure holistic protection for yourself and your loved ones in high-responsibility positions!
Directors and key personnel hold pivotal positions across various industries, including:
- Technology and innovation
- Corporate management
- Financial sectors
- Startups, scaleups and mature businesses in various sectors
At WeCovr, we leverage our wide network of underwriters specialising in insurance for directors and key personnel, tailoring coverage to suit individual needs.
Unlike many other professions, directorial positions encompass significant responsibilities and exposures that traditional insurance models may not cover comprehensively. The risks associated with such roles include:
- Decision-making liabilities
- Financial accountability
- Business strategy risks
- Legal and regulatory compliance responsibilities
These factors contribute to insurance providers assessing directorial roles as extra important, necessitating specialised coverage distinct from standard individual insurance policies.
Key Considerations for Insurance Coverage for Company Directors and Other Key Personnel
When seeking insurance coverage for directors and key personnel, there are crucial details that insurers may inquire about, including:
- Duration and nature of directorial duties
- Industry sector and associated risks
- Employee’s age and overall remuneration, including salary, bonuses, benefits in kind and regular dividends from the shares in the employers company or a company within the employers group of companies.
Get a free, no-obligation quote today - our advisers at WeCovr are equipped to guide and assist company directors and key personnel in obtaining the most suitable insurance coverage.