If you are starting a business, you are probably juggling dozens of tasks, from securing funding to hiring your first employees. But have you stopped to think about what would happen to your family or your business if something happened to you?
That is where life insurance comes in. For many entrepreneurs and company directors, a relevant life insurance policy is one of the smartest financial steps you can take early on.
Why new business owners should consider life insurance
When you start a business, the risks are higher than ever. You may be putting personal savings into the venture, signing loans in your name, or depending on the company’s success to provide for your family. Without life cover, everything you are building could be left vulnerable.
Here are the main reasons to take out life insurance when starting a business:
- Protect your family: A payout ensures your loved ones are not left struggling if you pass away.
- Protect your investment: Business loans or debts do not disappear when you do.
- Tax efficiency: Relevant life insurance allows you to arrange personal cover through your company in a tax-efficient way.
- Peace of mind: Knowing your family’s future is secure lets you focus on growing your business.
Why relevant life insurance is best for entrepreneurs
There are many types of life insurance, but relevant life insurance is particularly well-suited to small business owners and company directors.
Here is why:
- Tax benefits: The company pays the premiums, which are usually treated as a business expense. The policy is not considered a benefit in kind, so there is no extra tax for you.
- Personal protection: Although the business pays, the payout goes to your family or chosen beneficiaries through a trust.
- Scalable: As your business grows, you can add relevant life insurance for employees too, offering them valuable benefits without the high cost of a group scheme.
- Professional image: Providing life cover through your business shows you are serious about looking after people, including yourself.
Steps to set up relevant life insurance
- Speak to a life insurance broker who understands business protection.
- They will work out how much cover you need – usually based on income, debts, and family needs.
- They can also help set up the policy in trust so the payout goes directly to your beneficiaries tax-free.
- Review the policy as your business grows to make sure it keeps pace with your needs.
FAQs about life insurance for new business owners
Is life insurance essential when starting a business?
It is not legally required, but it is strongly recommended. Without it, your family and your business could be left financially exposed.
Can I pay for life insurance through my company?
Yes, relevant life insurance is designed for this. The company pays, but the benefit goes to your family.
What if I am the only director?
Relevant life insurance is ideal for sole directors, as there is no minimum number of employees needed.
Does relevant life insurance include critical illness cover?
No, it is strictly life insurance. If you want to protect against illness, you can arrange a separate policy, such as Key Person Critical Illness Cover.
Final thought
Starting a business is exciting, but it also comes with risk. The last thing you want is for your family or your company to be left exposed if something happens to you.
By taking out a relevant life insurance policy through IGotCover, you get peace of mind, tax efficiency, and long-term security for your family, all while focusing on making your new business a success.
