Share Purchase Protection looks after shareholders in the event of their death. Imagine if you had a Fellow Director who were to die; that Director’s shares would pass, usually to his or her Partner as part of their estate and you would find yourself in business with your former Directors spouse and perhaps, their new girlfriend or their new boyfriend – would you want this? The best solution is to write a Life Assurance policy on the life of the Directors, written under Trust for each other with an Agreement backing it up which says that in the event of the death the Life Assurance money would be used by the surviving Partner to buy the shares so the widow or the widower gets the money and the existing Partner gets the shares which is what everybody wants – putting the money in the right place.
Partnership Protection Assurance works in much the same way as Share Purchase Protection Assurance.
Key Person Assurance does not have to be a particular type of policy – it just describes what the policy is used for. Most business people are key to their businesses – without them their businesses would suffer, either if they were to have a Critical or Serious Illness and be away from work for 12 or 18 months or, God forbid, they were to die. In the same way, working husbands and wives are key to each other’s partnership – not only do they have love and affection between them, hopefully, but also they both are producing incomes into a household which, if that was to disappear, would cause serious problems to the remaining spouse and children.
Relevant Life Assurance has been around for 12 or 15 years now and it’s amazing how many people haven’t heard of it. It enables a company to write a policy on the name of an employee for up to 20 times salary if the employee is under 50. Imagine then a Managing Director who is paying himself £100,000 a year. He can write a £2,000,000 policy on his life which the company pays; the premiums therefore attract tax relief as a business expense. The policy has to be written under Trust for his or her Partner and children and is a terrific planning tool for individuals and businesses.
Critical Illness Assurance provides a lump sum on diagnosis of a Critical Illness. Most companies provide a list of over 40 Critical Illnesses and, on the diagnosis of any one of them, it will pay out the sum assured in total and the policy will stop. The cost of Critical Illness insurance is markedly higher than buying Life Assurance and for a very good reason – people are six times more likely to suffer from a Critical Illness than they are to die.
Serious Illness Cover is only sold by one insurer, that is Vitality, and it pays out on many more illnesses than a Critical Illness policy – the secret is it will pay out a lesser amount. So, under a Serious Illness policy, it could pay 5%, 10%, 15%, or 25% or 50% of the sum assured – this can be invaluable if the individual concerned is diagnosed with a less serious condition. Generally speaking, Serious Illness cover is a little more expensive than Critical Illness but just as worthwhil
Income Protection Assurance provides an income if an individual is ill long term. Usually speaking, it pays a maximum of 60% of income, tax free, until the individual gets better, or if they never get better, it goes through to retirement, either age 60 or 65 escalating each year. This is an invaluable addition to an insurance portfolio at not necessarily massive prices – particularly now premiums have been equalised between men and women.
Private Medical Insurance is available to get individuals back to work quickly in the event of suffering an illness. It will enable the individual concerned to see a consultant within a week or two rather than waiting months and any operation that their Consultant deems to be necessary can be performed, again, within a matter of weeks, rather than waiting months again for the NHS.