The choice of product will depend on a number of factors, namely:
- A specific need identified.
- Status and age of the Key Executive.
- Style of cover required.
Churchills International Consulting can advise on a range of products after identifying the specified needs of the Client.
It may also be desirable for a lump sum to be payable should the key person subsequently be diagnosed as suffering from a specified critical illness, or if he or she becomes permanently or totally disabled before the age of 65.
Business protection planning – Term Assurance
- The type of policy that will most frequently be recommended in connection with a Key Executive arrangement.
- Tax relief on premiums in many circumstances will prove an attractive feature to many Clients.
- Term Assurance does have its limitations.
It does not, for example, automatically provide any protection against inflation or against increases in the real value of the business and/or the Key Executive.
It will therefore be necessary to review the arrangements regularly.
For a higher premium however the following features can be added.
- Conversion Option: This allows conversions of all or part of fee policy to a further Term Assurance policy at any time during the plan term (without having to provide more evidence of your health).
- Renewal Option: This allows a new Term Assurance policy at the end of the existing policy term (again, without having to provide more evidence of your health).
Level of cover required
Calculating the amount of cover required based on the following information:
- Past profits and projections for the future.
- The effect that the loss of the individual would have on future profitability.
- The anticipated cost of recruiting and/or training a replacement.
- Expected cost of re-purchasing their share .
- Amount(s) of any loan(s) that would be called in on the death of the key person.
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