Business

LIFE COVER

There are 3 types of business assurance:

1) Keyman

2) Buy and Sell

3) Contingent Liability

Keyman Insurance

Keyman insurance is bought by an employer to insure a key employee. The funds derived from this cover would be to compensate the employer for any loss of income that they could suffer if the key employee dies or becomes disabled. The business would need to continue if this employee is no longer there and this obviously has huge financial implications – banks may have a relationship with the specific employee and may be reluctant to uphold existing credit facilities if they are no longer there. A replacement needs to be hired and trained and this too, can be a very costly event.

Keyman insurance can be conforming (the premiums are tax deductible and the proceeds will be taxed at the individuals current tax rate) or non-conforming (premiums are not tax deductible and the lump sum on death or disability will not be taxed at all)

Buy and Sell

Buy and Sell cover is cover taken out by co-owners in a business who will need funds to purchase the other co-owners shares in the event of death or disability. So each co-owner owns the policy on the life of the other co-owner. The lump sum paid out is tax free and hence the premiums paid are not tax deductible.

Contingent Liability

When an individual stands surety for any credit given to the business, life cover and disability cover should be taken out on the life of this individual so that should they die or become disabled the company will be able to settle the outstanding debts with the proceeds this ensures that the surety’s estate will not be held liable for this debt. The amount of cover should equal the loan amount. The company pays the premiums of the policy and an agreement must be in place to ensure that the proceeds will be used to repay the debt.

EMPLOYEE BENEFITS

There are two types of group benefits. A company can have either a Provident or a Pension fund. You can only belong to either of these as part of an Employer group. This is a great staff retention tool and is also a great benefit to have to attract new staff.

A pension fund has similar rules to a retirement policy vs a provident fund which pays out a lump sum when the member leaves the company.

You can add risk cover to either of these. This is a wonderful benefit that ensures that if a staff member should die or become disabled, neither they nor their family becomes a liability to the company.

Employee benefits can be tailor made to your company, to find out more click here now.

MEDICAL AID

Medical aids can be used as a company expense and ensures that the company doesn’t lay out funds when a staff member may have medical expenses that they cannot afford.

To find out more refer to Medical aids on our Medical Page.

Click here to find out more on any of these products