In the first of our Guest Blogs Vivian Slattery, of Monetary Solutions Limited, shows how an IFA can help your business
How can an IFA help a business?
by Vivian Slattery of Monetary Solutions Limited
A few years ago, I met someone who had recently joined a company where the sole director was left in a coma following an accident. No one had power of attorney, so no decisions could be made, and none of the business’ bills could be paid.
This shows how important it is for a business to have an IFA to help plan for such instances, just as much as it is for an individual.
I often say the most important thing an IFA offers is a sounding board to help you consider different scenarios. For example, when considering protection you have to look at cover for sickness as well as life insurance. In both cases, you need to consider the impact on the business-owner as well as on the firm.
A business owner needs to decide how they would replace their income if they fall sick, and should consider taking out:
- Critical Illness insurance which will pay out a lump sum if they are diagnosed with a critical illness such as heart attack, stroke and some forms of cancer
- Income Replacement insurancewhich is designed to replace income lost during illness or accident
The business needs to consider Key Man insurance to cover employees whose long- term sickness would affect the company’s bottom line. This not only helps to protect your business profit but could also allow time for another individual to be trained up.
Different issues need to be considered to protect the business against the death of an owner. Generally speaking, when a director or a partner dies, the value of their share will pass to their estate. Often, shares will then pass to a spouse or family member who might have no desire to be tied up in the business.
Shareholder or Partnership Protection is designed to pay out a lump sum equal to the value of the share in the business. This enables the remaining directors/partners to buy back the deceased’s share, which ensures the family gets the value they deserve whilst at the same time protecting the business. When planning this, you should also consult your solicitor because other legal agreements need to be in place to make this happen.
At Monetary Solutions Ltd, you can book a free initial consultation about any financial matters, so please call us on 01403 288078 or visit www.monetarysolutions.co.uk.
Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action