The sudden and tragic loss of Mark, the skilled barista and co-owner of “Square Beans” coffee shop, had profound consequences for the business. Without the protection of Key Person Insurance, the establishment faced several significant challenges:

Outcome Without Key Person Insurance:

• Operational Chaos: Mark’s absence leaves a gap in making coffee, causing confusion and longer waiting times for customers.
• Ownership Uncertainty: Mark’s family now owns half of the coffee shop, but they don’t have the skills to contribute to its daily operations.
• Financial Strain: The business faced financial strain as it struggled with the loss of revenue resulting from a decline in customer satisfaction and a decrease in staff retention.
• Customer Loss: Some regular customers leave due to the decline in service quality.
• Staff Loss: Worried about the cafe’s future, other staff members start seeking new jobs.

Outcome With Key Person Insurance:

• Operational Continuity: With Key Person Insurance in place, the business would have had access to financial resources to hire and train temporary staff or bring in additional support, ensuring minimal disruption to daily operations.
• Ownership Certainty: The insurance policy could have facilitated a smooth transition of Mark’s ownership stake, ensuring that the business remains in capable hands or facilitating a buyout arrangement that preserves business continuity.
• Financial Security: The financial support from the insurance policy would have alleviated the strain on the coffee shop’s finances, allowing it to weather the immediate impact of Mark’s loss.
• Customer Retention: The ability to maintain product quality and service standards would have helped retain loyal customers and prevent a decline in sales.
• Staff Retention: With measures in place to ensure operational stability and financial security, staff members would have been more likely to remain with the business during a challenging period.
• Family’s Financial Security: Mark’s family would have received a payout from the Key Person Insurance, providing them with financial security and support during a difficult time.

In this straightforward illustration, Key Person Insurance proves essential in maintaining the coffee shop’s stability, ensuring it can keep serving its loyal customers, and providing financial security for both the business owners and Mark’s family.

Pension Term Assurance

Pension Term Assurance is a life insurance policy designed to provide a lump sum payout in the event of the policyholder’s death during the term. 

This unique policy structure leverages available tax relief under pension legislation, and you don’t need an existing pension plan to take advantage of it. 

Eligibility includes being self-employed or working in non-pensionable employment. 

Notably, one of the main benefits is the ability to claim full tax relief at your marginal tax rate on premiums, potentially making this valuable protection up to 40% more cost-effective than a standard Term Assurance policy.

Executive Income Protection

Executive Income Protection policy is another valuable insurance option for business owners.

This not only provides a contingency for your company in times of need but also guarantees the continuity of your pension contributions in the event of unforeseen circumstances. 

With Executive Income Protection, you can safeguard the funds allocated to your company pension while ensuring that, in case of illness or injury that prevents you and/or your employees from working.

Such policies will yield up to 75% of your salary, inclusive of state benefit (if applicable). Additionally, it’s worth noting that the company covers the premiums, which can be categorised as a business expense.

Get in touch with True Wealth; we are equipped to offer expert guidance throughout the insurance journey for business owners.

6. Cashflow Planning

A pivotal component of a Business Owner Financial Plan involves the utilisation of our Online Cashflow Model, a tool designed to assess your existing cash flow and generate potential scenarios.

This empowers you to visualise the potential trajectory of your financial future under various circumstances. 

Additionally, we enhance the robustness of our proposed solutions by stress-testing them, employing deterministic modelling techniques up to 10,000 times.

This approach is rooted in the understanding that markets exhibit non-linear behaviour, and thus, future cash flow models should mirror this reality.

The stress test, known as ‘Monte Carlo,’ takes into account your current risk tolerance, market trends, and provides you with pessimistic, optimistic, and average outcome scenarios, offering a comprehensive view of potential financial pathways.

Get Started Today with True Wealth

We will assist you in gaining a holistic perspective and taking meaningful action, ultimately leading to improved outcomes for both your family and your business.

In addition, we offer a valuable second opinion on critical financial decisions, ensuring that you make well-informed choices that align with your goals and aspirations.

We at True Wealth are experts in personal and business financial planning, retirement and pension planning, pension tracing, savings and investments, protection, mortgages, and wealth management.

At True Wealth, our financial planning services are designed with business owners in mind, recognising that each individual’s circumstances, goals, and risk tolerance are unique.

Get in touch with us today; we are here to assist you in crafting a personalised financial plan that precisely caters to your distinct needs and aspirations.