Looking after your assets
Plan for what the future holds
Things always change...
Plan insurance wisely to protect your assets and your loved ones.
Quite often when we are working hard to build a good life for ourselves, it is hard to imagine a time when things might change.
When we talk to people about what life might look like when they are no longer working many people say “I’ll always work.” But we don’t always get this choice. Sometimes poor health or circumstances can change everything.
FOR THE PERSON
Whole of Life Insurance
Many mortgages, for example, are covered with term life insurance, but if affordability has been accurately assessed it could be that a whole of life policy is more beneficial.
Term policies pay out should the person die during the term of the mortgage, a whole of life policy pays out on death—whenever the time of death occurs; in effect covering the whole of life, not just a set period of time.
It is also worth noting that whole of life policies can help families with inheritance tax bills should estates be worth more than £325,000. In these cases a 40% tax bill on an estate is hard for bereaved loved ones to find, but a whole of life policy, placed into Trust, can help with such costs.
Income Protection and Critical lllness Cover
It is vital to understand the full circumstances of the client; what are their current assets and expenses, including pensions and investments and what could be at risk if a main bread-winner loses their income.
Whilst a term life insurance policy may be suitable to pay off a mortgage, considering income, post the time that the mortgage is paid off is also vital to ensure that the client can maintain lifestyle and continue to pay expenses and accrue assets.
Most people do not just die without experiencing some form of illness and quite often these can be chronic and continue into years. For main earner clients and clients with their own businesses critical illness cover should be considered as part of robust financial planning arrangements so that an income can be maintained
FOR THE BUSINESS
In work we do not always consider what would happen in the unfortunate event that a business partner dies, leaving the other partner to manage the business alone.
But it is worth considering as not all business partnerships can be replicated with a partner’s spouse.
In terms of inheritance, by law, a spouse would inherit the shares in a company on death,
which could pose a problem if the spouse or the surviving business partner do not wish to develop a new working arrangement with both involved.
Shareholder protection is a life insurance plan that enables the purchase of the shares from the spouse so that, in the event that the spouse is not continuing in the business, they can receive payment instead.
This insurance can be managed by something known as a cross -option arrangement and should be detailed in business partners’ wills.
Key Man Insurance
If there is someone within a company who has a specific set of skills that cannot easily be replaced then key man insurance could help.
This type of insurance can be either through income protection or life insurance. This type of insurance helps to bolster the company by supporting it with its continued obligations in the event that the “key man” is no longer available.
Private Medical Insurance
This should be considered alongside Key man insurance when considering a business’s continuity plan.
Having access to quick and efficient treatment by paying for private medical care could be the difference between a company surviving and a company going under.
Retirement and pension planning
Investing in a business to help it grow and become successful should be part of any business owner’s retirement/exit plan.
Relevant Life Insurance
Life Insurance is set up for the business partner via the company making it tax efficient.
There are many tax efficient options for helping business owners succeed with regards to careful pension planning, both for themselves individually and with regards to the use of SIPPs to own business premises.
We would always encourage business owners to seek the guidance of financial planners when considering investing in their business to ensure that their business development goals can be realised in the most tax efficient way possible, benefitting the owner now and in the future.
But that’s not all, it also enables the business partner to ensure the financial security of a spouse or family member on death. This type of insurance is set up so that the proceeds from the insurance policy go straight to the beneficiary.