Insure the One Asset Your Business Can’t Run Without: You
Most people insure their phones, their cars, their pets and their homes. It can be difficult to consider life’s uncertainties or what happens when we’re no longer here.
As a company director or business owner, however, it’s essential to plan for the unexpected. Think of it this way: imagine a machine in your office that reliably generates your income every single month. If it breaks down or stops working, the income stops too. Naturally, you’d insure that machine.
In reality, you are that machine. Your ability to work and earn an income drives your lifestyle, supports your family, and sustains your business. Yet many directors and entrepreneurs overlook the importance of insuring themselves.
In this issue, we explore two powerful, often-overlooked strategies to safeguard your income and protect your loved ones—Income Protection Insurance and Relevant Life Insurance.
Income Protection
Income protection insurance provides a financial safety net if you're unable to work due to illness or injury. It ensures that, even if the unexpected happens, you continue to receive a monthly income.
More importantly, for directors and business owners, the premiums can often be structured in a way that makes them tax-deductible, meaning this peace of mind comes without significantly affecting your bottom line.
Relevant Life Insurance
Relevant Life Insurance is a tax-efficient life cover solution designed for company directors and high-earning individuals. Like personal life insurance, it pays out a lump sum to your loved ones in the event of your death. However, it has one key difference: the policy is paid for by your business, not from your personal income.
This offers several significant advantages:
- Tax-deductible premiums as a business expense
- No impact on your personal income
- Payouts are usually free from income tax and inheritance tax
- Potential savings of up to *49% compared to personal life insurance policies
Don’t Leave It to Chance
What would happen if something happened to you? Make sure you are up to date with your protection planning, as the right insurance could provide both peace of mind and substantial tax savings.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Protection plans do not acquire a cash value. The cover provided will cease if premiums are stopped.
* If the employee is a higher rate taxpayer. Basic rate taxpayer figure could be up to 40%
By Gregor Watt
Managing Director and Chartered Financial Planner
HJP Chartered Financial Planners
To find out more about Greg, click here
Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.
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