Corporate insurances
Companies require specialist financial advice because of their importance to their staff and
because of the corporate and tax laws which affect them.
Key-person insurance
Directors and employees with specialist skills or knowledge are key employees of the companies they work for. To lose one through death or incapacity can be damaging to the business. That is why taking out a key-person insurance to protect the company is a wise move.
Key-person insurances can provide several benefits. These can include:
- Paying the costs of a temporary replacement
- Meeting the costs of recruiting a permanent replacement
- Covering the cost of death or incapacity of a key member of staff.
The full scope of cover will depend on the type of policy purchased, but companies ignore
the risks of losing key staff at their peril. Shareholders, bank managers, suppliers and
customers may not be so laid back…
Share protection through life assurance
Directors' or partners' share agreements may provide for the remaining directors to purchase
the shares of other shareholding directors when they die. However, there is a risk that
the remaining directors may not have sufficient funds to hand when a fellow director passes
away unexpectedly.
One way round this is to take out life cover as a source of funding.
To arrange such cover requires the understanding and agreement of all concerned. It will
also require some careful figure work to determine how much cover is required. But it
will be a comfort to all directors or partners of a business to know that their own or a
colleague's death will leave the other directors with sufficient support to carry out the
terms of their shareholders' agreement.
Pensions & raising capital
Directors may prefer to establish a separate pension plan from that of their employees. The
reasons for this are that the term of their employment may be a fixed number of years,
their tax position may be more complicated than other employees, or they may prefer to set up
a form of self administered scheme more suitable to their circumstances.
Directors and partners may also wish to leverage their company pension scheme at some stage to
raise funding for the business. This may be a tax- and cost-efficient way of funding the
acquisition of commercial property.
Please note commercial mortgages are not regulated by the FSA.
In these circumstances, sound pensions advice will be invaluable.
Levels of Taxation depend on personal or company circumstances.
Directors and staff benefits
Recruiting, motivating and retaining able staff is a key preoccupation of many businesses
and getting the rewards mix right is an important ingredient. Remuneration menus made up of
pensions, life insurance, tax efficient bonuses and benefits are common in well-managed
businesses. But they require careful planning and selection depending on the type of business
and the type of staff who are involved. What motivates and retains staff at an Internet start
up business or a bioscience research operation may require a different balance than at
a manufacturing business with a substantial production line workforce.
If staff are the keys to successful businesses, then well-founded and well-managed reward
strategies are vital. Taking the right advice early on means that you can make
the right moves sooner rather than later. The result should be contented and efficient staff
who are confident that they are getting the best deal for their time and their labour.
Kellands Northern Ireland Ltd are authorised and regulated by the Financial Services Authority. FSA No: 219402
Registered in Northern Ireland No. NI43576
Registered Office: 212-218 Upper Newtownards Road, Belfast, BT4 3ET
Directors: Robert Forster Cert PFS Jonathan Finlay Cert PFS Julie McCrea Susan Wilson
WARNING - The guidance and/or advice contained within this website is subject to the UK regulatory regime,
and is therefore targeted at consumers based in UK
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