This is a business-specific life insurance that can provide compensation to a company if one of the directors of the firm dies. If this unfortunate event occurs, a lump sum will be released, allowing the deceased person's shares to be bought from their next-of-kin, in the company's name. The directors of a company are often the major shareholders and key decision-makers within a firm. A successful business depends on the co-operation and experience of its directors. If one of these directors becomes seriously ill or dies it can create great difficulty for surviving directors and the deceased's successor(s) alike. Corporate Co-Director Insurance gives the company the security that there will be funds available to buy back shares should this happen.

Policy arrangement

The premium that is paid on a regular basis during the terms of the policy will be dependent on a number of different factors, such as the value of the shares that the director holds, the company's turnover etc.

Life of Another Policy (Company is policy owner, director is life insured.)

Taxation

The premiums are not admissible tax deductions.

• Proceeds are tax-free.
• The tax treatment of the buy back of the company’s own shares is complex (see Corporate Co-Director Insurance brochure for more information).

How does it work?

Co-director Insurance can be taken out at any stage of your company's lifetime. You will pay a premium on a regular basis, based on the cover that is required and the value of the shares of the director. If the unexpected happens and this director dies, the policy will provide a lump sum to compensate for this event. This can be used to buy the deceased directors' shares from his/her next-of-kin.

Product features;

• Peace of Mind: Company directors know they will be in the position to keep control of the company.
• Ease and Choice: The deceased's successor is not obliged to become involved in the business.
• Stability: The remaining directors can retain ownership of the company and provide continuity for the business.
• Options: This insurance can also provide serious illness cover.

Why take out Co-director Insurance

Many business owners believe that it simply won’t happen to them. The chances of a partner or director, in a small business dying or becoming seriously ill before retirement, are probably a lot higher that you might think. The death of a director may bring distress and grief to any organisation. As well as that, it could jeopardize the security and direction of the company. If the deceased director was a majority stakeholder, the remaining directors may lose control of the company if next-of-kin were to take over. The deceased's family may be unfamiliar with the business, and may have cash-flow problems after losing his/her income. The lack of credit to small businesses could result in some surviving business owners having insufficient funds to purchase a deceased owner’s share of the business Co-Director Insurance makes it possible for the directors to buy the shares from the family, which could be the best option for all concerned.