Directors and companies need to be aware of shareholder protection insurance and what it could mean if you do not put things in place properly. Much like key man insurance, shareholder protection protects the shareholders in the event of another shareholders death or diagnosis of a critical illness. It can be set up much the same as a key man insurance policy. IE the company pays for and owns the policy, but there is also a shareholder agreement put in place. These are sometimes called cross shareholder agreements or double option agreements. They can normally be quite straight forward to set up but it obviously depends on how many shareholders there are and what the splits in shareholding is. MyKeyManInsurance can provide simple shareholder agreements and guide/help set them up along with setting up the life & critical illness part of the policy of course. We would always advise that you maybe seek the advice of a solicitor as well to help set up the policy. Especially if there is already a company will in place.

In its simplest form, shareholder protection offers the shareholders the option of buying out the shares from the deceased next of kin (wife or husband). Without a shareholder protection and agreement in place this can often cause lots of problems as the next of kin may now own a large amount of shares of a company of which they really know little of the day to days running’s. The remaining shareholder or holders may be in a position where they are now struggling to run the company an unable to afford to buy the shares from the deceased next of Kin. This now leaves the company in a very tricky position and can often cause many problems as well as a loss in share value. With a shareholder protection insurance in place the remaining shareholders can use the insurance benefit to purchase the shares from the deceased wife/husband for a pre agreed price therefore not having to find the money from their own funds. Both parties are therefore financially happy. Take a look at the video on the homepage for further in depth look at what can happen without shareholder or key man insurance.

To set up shareholder protection insurance is not always as straight forward. Please feel free to drop us an email or call us on 01702 219560 for advice for setting up or shareholder agreement documentation.

We use a range of other insurance providers and their products may be more suitable for your needs. These articles are for information only and does not constitute as financial advice in any way.

MyKeyManInsurance.co.uk is now able to offer group protection. This can be in the form of an income based benefit or a lump sum much like a life insurance or critical illness policy. This is a great addition to our companies arm and will allow us to offer a much more suited and tailored protection policy to companies which are of a larger size. Most Key Man Insurance policies are targeted at the key people within the business, such as directors etc but the group protection can cover everyone within the company under one policy.

Group Protection Benefits
Group income protection or group life cover is a great cost effective way of providing a key benefit to your employees and is a great incentive when looking to show that you care about the person you are employing. As well as offering a cheaper way for the employee to take out life insurance, the premiums are also seen as a business expense for tax purpose. Group income protection works slightly different in that the benefit is paid out to the company much like key person insurance. If one of your employees are off with a long term sickness, a group policy would pay your company a monthly payment. The minimum deferred period is normally 13 weeks which means the benefit would not kick in until after 13 weeks of the employee being off sick.
If you are interested in finding out more about group income protection or group life cover, please could you contact us on 01702 219560

We use a range of other insurance providers and their products may be more suitable for your needs. These articles are for information only and does not constitute as financial advice in any way.

Insuring the key people who bring business and profits for your company is very important.  These people are your human assets and their loss could have dire financial consequences for your company.  One of the best ways to protect your human assets is to buy key person insurance for them.

This type of insurance is also known in the industry as keyman insurance.  It is a fairly new product but becoming very popular especially among larger companies.  This insurance will provide compensation if your company loses a key person who performs a crucial role for the business. 

Identifying Your Key People

Almost all companies have key persons.  It could be you as the owner of the business or a major partner.  Identifying key people in your company is very subjective.  There is really no hard and fast rule that will guide you when identifying the key persons in your company. 

The most obvious persons who perform crucial corporate functions are the founders and the major business partners.  For example, if there are three major partners in a company, a loss of one could have disastrous impact on the operation of the business. 

If your company is into sales, a worker who rakes in big profits from sales month after month could be your key person.  If he or she succumbs to a debilitating illness, then your company will lose its profitability.  So you need to purchase key person insurance in order to minimize your loss.  The proceeds of the insurance will serve as compensation for the loss of profits. 

Companies who are engaged in scientific research and product development normally hire technical experts.  The skills and the services of these experts are sometimes irreplaceable.  Your company could suffer a great setback if you lose one of your experts.  To protect your business, you should get keyman insurance for your key expert so that you can get money to hire a replacement. 

The Need for Key Person Insurance

You probably know already why key person insurance is important for your company.  This insurance protects the business against sudden dislocation.  Given the crucial roles of your key people, the business may not be able to operate if they fail to work.  So this could result to big financial troubles for you.  Worse, your investors might lose their confidence in your business. 

When choosing key person insurance, it is important to consider the overall value of your key people.  As a rule of thumb, the amount of insurance should be equal to five to ten times the salary of your key person.  You must also consider the potential profits that can be provided by your key person.  You can make an accurate assessment if you evaluate the performance record of your key man for the past five years. 

Keyperson insurance is crucial for the continuity of your business.  You should never underestimate the importance of this type of business insurance for your company.  If you want to avert financial stress and possible bankruptcy, then a key man life or health insurance is a viable option for you. 

We use a range of other insurance providers and their products may be more suitable for your needs

These articles are for information only and does not constitute as financial advice in any way

Legal and General’s Critical Illness Cover comes with a 5 Star rating from Defaqto, a leading UK independent research company, and have recently doubled their ABI+ illness definitions, giving clients the most* ABI+ illness definitions available from any provider for no extra cost.

ABI+ definitions go beyond the ABI model** critical illness definitions and offer wider cover for the client.

Below shows the changes made to their Critical Illness Cover Plans, increasing the ABI+ definitions from 4 to 11. This is good news for those looking for Key Person Insurance with good critical illness cover as Legal & General tend to be good on price too. Ask us for a key man quote now and see how much cover with Legal and General costs.

Critical Illness	ABI+ before 23 May 2010	ABI+ after 23 May 2010
Aorta graft surgery – requiring surgical replacement.
Benign brain tumour – resulting in either surgical removal or permanent symptoms.
Coma - resulting in permanent symptoms.
Coronary artery by-pass grafts – with surgical thoracotomy.
Heart attack – of specified severity.
HIV infection – caught from a blood transfusion, physical assault or accident at work.
Heart valve replacement or repair – with surgical thoracotomy.
Loss of hand or foot – permanent physical severance.
Paralysis of a limb – total and irreversible.
Parkinson’s disease – resulting in permanent symptoms.
Third degree burns – covering 20% of the surface area of the body or 50% of the face or head.

This information was sourced from Legal & General June 2010

We use a range of other insurance providers and their products may be more suitable for your needs

These articles are for information only and does not constitute as financial advice in any way