Protection

154 | Key Person

In order to consider the viewing of Akademia videos as structured learning, you must complete the reflective statement to demonstrate what you have learned and its relevance to you.

Tutors:

  • Robert Betts, Market Development Manager, Legal & General
  • Stuart Halliwell, Market Development Manager, Legal & General

Learning outcomes:

  1. The need for key person cover
  2. How to set up key person cover for different types of business
  3. The treatment of premiums and policy proceeds for taxation purposes
  4. How to identify key people within different kinds of business
  5. How to calculate the appropriate sum assured for key person policies
  6. Business demographics and attitudes with regard to key person cover
  7. How certain businesses can use key person policies within their sales process

Channel

Protection
PRESENTER: Key person protection is the subject for this Akademia learning unit, with our tutors Stuart Halliwell and Robert Betts, both market development managers at Legal & General. So let’s go through the learning outcomes. Firstly, the need for key person cover; how to set up key person cover for different types of business; the treatment of premiums and policy proceeds for taxation purposes; how to identify key people within different kinds of business; how to calculate the appropriate sum assured for key person policies; business demographics and attitudes with regard to key person cover; and how certain businesses can use key person policies within their sales process. Well, we begin in the studio with Stuart Halliwell giving a definition of key person protection. Well, let’s start with the real basics first. What exactly is key person protection? STUART HALLIWELL: Well, simply, key person cover is put in place to protect the profits of a business or its ability to repay its debts or even simply to cover the cost of replacement following the death or critical illness of a key individual. Putting this cover in place simply indemnifies the business against the loss of key individuals and ensures that business is able to make the right decisions at a very difficult time. PRESENTER: So, how would protecting these key people help the business? STUART HALLIWELL: If the insured key person dies or suffers a critical illness, if that’s chosen, the policy proceeds are used to replace the profits that that individual would have produced for the business. Or to pay any debts that the business may have or indeed provide the required funds to find and train a replacement of that key individual. So what key person cover really does it potentially buys the business some breathing space. It means that they can make the right decisions for their continued success without the various stakeholders breathing down their necks. Pressure from the likes of the bank, private investors, customers or suppliers could force them into making rushed or indeed rash decisions that aren’t necessarily in the business’s long term interests, but are in their short-term interests. By injecting cash into the business it relieves this pressure, keeps the business solvent and allows them time to reassess their situation. PRESENTER: So the effects really depend upon the key person themselves, their role and the size of the company. STUART HALLIWELL: Exactly right. Every situation is different. The problems a business will face following the death or critical illness of a key person will be unique to them. As an adviser you have to find these out and then get the company to realise the impact. For example, the difficulties a manufacturing business could face may be very different from the ones a software business could experience. Likewise a 4-person business may be more affected than one with 20 people, but not always so. Despite this and the need to treat each business as individual there will often be one common factor: the business must attempt to continue without the experience and expertise of its key person. This can often lead to longer-term financial implications that we need to highlight when in discussion with the business owners. PRESENTER: This might seem like a pretty basic question, but you mentioned financial implications there. What are some of the things you’re talking about? STUART HALLIWELL: No, it’s not basic at all. From our research this self-awareness of the risk was one of the major issues. For example, the top reason for not having the cover was that it was something they’d never considered. But if they took the time to consider it or talk to a financial adviser then they would realise the potential impact or issues that could arise following the loss of a key person. Things like profits may fall, especially if the key person was in charge of the sales. If profits are falling it would become more difficult to meet their commitments. Loans may need to be refinanced where the key person was a guarantor. Creditors may no longer be prepared to offer the same facilities and in fact the bank could cancel overdraft facilities or ask for loans to be repaid. This could lead to finance for new ventures or planned expansion to be less easily available. The company may have to repay a loan that the key person has made to the company, possibly through a director’s loan account, and increased workloads for the remaining staff. Just a few examples and that’s not an exhaustive list by any means. It’s so important when talking to a business to try and consider all the practical effects of losing a key person. Helping them to understand these problems will enable a detailed discussion on the importance of key person or business loan cover. Simply asking the question, what would happen if you died or you lost your top salesperson, can be all it takes to start the right thought process. PRESENTER: So what exactly constitutes a key person; does it have to be somebody important like the boss or the head of sales? STUART HALLIWELL: No, not really, it could be almost anyone. And identifying who you should insure can sometimes be an issue with small businesses. Take a small financial adviser firm which has a single salesperson and a paraplanner. The salesperson may well be key in terms of generating sales, but what about the practical side of transacting the business? In all likelihood they are reliant on their paraplanner. Without them the salesperson would have to do all the admin work and the research, meaning they have less time to see clients. Sales suffer as a consequence, profits would fall and that could lead to the firm going out of business. So the paraplanner is actually key to the ongoing success of that business. Whereas, if the salesperson were to die, then the business is likely to shut down anyway, so are they worth insuring? PRESENTER: Well, that’s really interesting, because you’re making it clear there it’s not necessarily the high profile front of house person that’s the key individual here, it could be anyone. STUART HALLIWELL: Correct. The key thing to remember is that in a smaller business an individual’s job title does not always denote their responsibilities or for that matter their importance. A business may not have a dedicated HR director, but there will be someone more senior responsible for those duties. A business may not have an IT director, but there will be someone who deals with the day to day IT problems. The loss of a key person will leave both obvious and also unexpected skill gap within that business. Also don’t forget that in smaller companies the director and the owner will often be the same person. Customers, suppliers and the bank may often treat the shareholding director as though they are the company; they are the brand, if you like. The same is true for equity partners in a partnership or members of an LLP. A business owner in some small businesses may be the only person whose loss would have a serious effect on the profits and so you just need to insure them. A key person can literally be anyone in the business that could directly or indirectly affect that company’s financial strength through reduced profits or extra cost; neither of which are good news and could be terminal for the business. PRESENTER: Well, if there’s such a big need for this type of protection, why don’t more companies have it or consider it? STUART HALLIWELL: It really comes down to awareness in many cases. As I said earlier, it’s just something they’ve never considered. If you look at our research into the SME market, we spoke to over 700 business owners and more than half of those businesses didn’t have key person protection; yet many had insurance to protect their families and even their pets. They realise the benefits of insurance from a personal perspective, but haven’t taken the time to consider what would happen to their business. And this really comes down to advice. Nobody is talking to the business owners about business protection. Just under half the businesses we spoke to had a financial adviser. Many have accountants, but they don’t talk to them about it. And, let’s face it, there’s very little self-realisation when it comes to insurance. We tend to take it out because we’re advised to. One of the surprising points in our latest research was that of those with any business protection 73% had taken cover only following advice. It’s not through some form of self-recognition of the risks. So we need to be proactive and go out and talk to businesses. PRESENTER: And what are the main reasons that companies give for not having this protection? STUART HALLIWELL: Unsurprisingly their own lack of knowledge was the main reason that business owners gave for not having protection. In addition, even if they were aware of key person cover, a quarter hadn’t got around to looking into it. And finally 27% told us that they expected the cover to be too expensive, implying as they used the word expected that they have not really looked into it. These are all areas where an adviser could help them to realise the benefits and the cost of an effective solution. PRESENTER: They expected it to be too expensive. How expensive is it? STUART HALLIWELL: Not as expensive as people think. In our latest research we asked business owners how much they thought it would cost them to provide life cover and the average of their estimates was that it would be three times the actual cost. But of course that all depends on their health, age, term and the amount of cover, but generally people hugely overestimate the actual cost of protection. PRESENTER: Now, from what you’ve said so far it sounds like the people that make a real difference to the business are the ones to consider where it comes to key protection or key man protection, but is that the only risk that business owners have to think about? STUART HALLIWELL: It’s the main one and the one which is most difficult to replace. If your offices are burnt down you could replace them, if the computers crash you can replace those, usually these are insured as well. But replacing a key person and their skills is a different question. You can’t just go down the shops and buy a new replacement. When running a business most owners are focused on the day-to-day delivery and doing the best for their customers. They may be aware of the obvious risks which they can see or know about, but unfortunately this means they don’t always have the time to think about the what-ifs, what would happen if a key person died. It’s just human nature that we don’t like thinking about death. But when we asked the business owners to consider the risks to their business in detail, 63% realise it’s the people who really make the business and their loss would be their biggest risk. PRESENTER: Well I think from this we’re saying people are the most important asset a business has, but is there a doom and gloom element to this that actually some people just aren’t replaceable, it could just be terminal for the business, regardless of the insurance? STUART HALLIWELL: Yes, you could be looking at just that scenario. One of the big revelations within the research for me was the difference in the perceptions of the impact to the business of losing a key person and the reality that this could bring. When we first asked the question about how losing a key person would affect their business 37% said it would have no effect on their staff, yet many businesses have less than 10 employees. So you would expect the staff to be a little concerned regarding their futures if the business lost its key person. Two thirds said it would have no impact on their creditors and this includes the bank, but I would have thought that they would be concerned about the ability of the business to repay its debts. 60% said it would not impact their brand or their customer base, yet many small businesses generate business due to their reputation or the personalities within them. Would a customer stay loyal if there was a loss of that key person? And finally, 54% said it would not actually affect their income or their cash flow. What if that key person was their top salesperson or indeed the paraplanner we discussed earlier? But when we asked more questions on this point and we got them to really think about the reality of such a situation a huge 52% admitted that their business would not survive 12 months. PRESENTER: That’s quite a worrying response in a way. Couldn’t they just go out and recruit a replacement? STUART HALLIWELL: Well, yes, they could, but if they lost their key person they have an immediate need to replace them. The business doesn’t just go on hold whilst they find a replacement. Also, even if the business could survive without their key person, there is an impact in terms of the time it might take to find someone new and the associated costs of that recruitment. If they were to consider all of the potential costs involved in what would be an emergency situation, it’s likely that they would have a far higher amount, especially if they were to take into account the likes of head-hunters’ fees, increased salary for the new person, joining bonuses and the need for temporary staff or to outsource work whilst a new recruit is working their notice period. Replacing key people can be harder and more costly than many business owners realise. PRESENTER: But when we’re talking about this subject, is this coming from anecdote or people thinking about what might happen or have the firms you’ve spoken to had personal experience of this as an issue? STUART HALLIWELL: In the research just over a quarter had experienced the loss of a key person or an owner in the past. They found that their business was impacted in various ways: 30% had lost profits, 19% had lost confidence from their customers and one in five had had to recruit replacement staff. This will have an impact on the day-to-day operation of the business and having to compensate in these various areas. Indeed, as already mentioned, the impact could be too large and it could mean the business doesn’t recover. PRESENTER: So are we just considering here the cost of replacing the individual? STUART HALLIWELL: No, a key person policy could help the business to continue trading by replacing any lost profits that the key person produced, so making the difference between the business surviving or failing. A business can exist as long as it can meet its overheads, it doesn’t necessarily have to actively trade. If it has money in the bank its solvent and that’s what we are trying to do with this protection, inject some cash into the business via a life policy, much like we would do with our domestic clients. You can pay your bills, your mortgage and maintain your lifestyle as long as you are solvent. A business is no different. PRESENTER: We’ve talked a bit about the risks, the opportunities, some of the research you’ve done, how advisers can start conversations with their clients, but I want to look now at what businesses can actually do specifically to help protect themselves, and a little earlier I caught up with Robert Betts, he’s one of L&G’s experts in this field, and here’s what he had to say. ROBERT BETTS: Well, it depends on the type of business. In the UK we have four main types of business entities. We’ve got sole traders, partnerships, limited liability partnerships, or LLPs, and limited companies. Firstly, let’s look at setting up cover for a limited company or an LLP. Putting key cover person in place for these is relatively simple. They’re both legal entities in their own right, separate from their owners. This means that they can own property, including insurance policies. Therefore it’s possible for the policy to be set up with the business as the proposer and owner. Cover is then taken out on the key employee to cover recruitment replacement costs, loss of profit or debt cover on a life of another basis. The business is responsible for paying the premiums and will receive the proceeds of a claim should the key person die or suffer a critical illness during the term of the policy. If cover is required to cover both loss of profits and the repayment of debt it’s always advisable to cover the risks under separate policies. This is due to the different way that the proceeds could be treated for tax purposes due to the nature of what they’re there to protect. Let’s now consider a partnership. Unlike a limited company or an LLP a partnership does not have any separate legal identity. Therefore it cannot take out a life policy. If a partnership has a key person, either an employee or an equity partner, a key person policy can be taken out on an own life basis and placed under trust for the benefit of the partners. This should also allow for any future changes in the partnership. It helps to ensure that any partner that leaves the business will not benefit from the policy; however any new partners will. If the key person were to leave or retire from the employment of a partnership the trustees as the legal owners of the policy could do one of the following things. They could stop paying the premiums and allow the policy to lapse, or they could continue to pay the premiums until the end of the policy term, then in the event of a valid claim the trustees would receive the policy proceeds for the benefit of the beneficiaries of the trust. Or the beneficiaries could assign their beneficial interest to the employee. The trustees could then assign the policy to the employee so that he or she becomes the legal owner of the policy. He or she may then wish to place the policy in trust for their own beneficiaries. An alternative option for an employee of a partnership would be to set up the policy as a life of another policy with the equity partners being the policy owners. This may however prove to be a less flexible option than the own life under trust method. A point of note regarding partnerships is that if the partnership is a Scottish partnership then it does have its own separate legal identity. For cover in Scotland the policy would be written the same way as it would be for a limited company. Next we have to work out how much cover is needed. The sum assured we arrive at will depend on the aim of the key person policy. If the policy is taken out to protect a loan or debt then the sum assured will simply mirror the level of the debt owed. If the cover’s there to provide a sum of money to cover new staff recruitment costs or to replace the lost profits of the key person, we’ll either use a multiple of the key person’s salary for replacement costs or use a formula based on the proportion of profits they were responsible for. When looking at the cost of recruiting key or new key employees they may actually include things such as head-hunter fees, compensation payments, it could be bonuses or share options from their previous employment. There may even be a golden hello or a joining bonus. We mustn’t forget that the business will probably also need to employ some temporary staff whilst the new person is being recruited and serves their notice period. So if we take all of these additional costs into consideration we need to work out a sum assured and a common formula for a life policy would be based on 10 times the key person’s salary or total remuneration package, and it could be around five times their remuneration package for a critical illness policy. It’s worth noting that the salary of the employee may not actually reflect that individual’s true worth to the business. They may be one of the key profit drivers and as such the policy would be there to replace the lost profits might be more suitable. Loss of profits formulas are usually either two times the gross profit or five times the net profit, and that’s the proportion of the profits attributable to that key person. The individual’s role within the business will help us decide whether or not we use gross profits or net profits as the basis of the calculation. For example, if we have an employed salesperson with no managerial capacity then gross profits may be the appropriate figure because they would have little or no impact on the overheads of the business. However, if the key person was also the managing director then a profit calculation may be more appropriate as he or she could influence the cost base of the business. To help when calculating the key person sum assured Legal & General provide a simple calculator. You simply input the proportion of the profits the key individual is responsible for, confirm whether we are calculating using gross or net profits and then ask for the average of the last three years’ profit. You can find the calculator at www.legalandgeneral.com/business and it can be downloaded for use offline as well. For key person debt cover to protect a bank loan, mortgage or a director loan account, the sum assured will normally just mirror the amount of debt that’s owed. One question advisers get asked time and time again by clients and accountants when putting key person cover in place for limited companies is can tax relief be claimed on the premiums, i.e. can the premiums be offset against the corporation tax? They’ll also want to know if they’re going to pay corporation tax on the policy proceeds. Now, the tax position for key person cover is not straightforward. There isn’t any direct legislation addressing it. There are however a set of principles that shape the process and these were set out way back in 1944 by the then Chancellor of the Exchequer, Sir John Anderson, and it was in response to a question in the House of Commons about when a company could receive corporation tax relief on life insurance premiums he said the general practice in dealing with insurances by employers on the lives of employees is to treat the premiums as admissible deductions and any sums received under the policy as a trading receipt. This would happen if the relationship is the sole relationship of employer and employee; the insurance is intended to meet the loss of profits resulting from the loss of services of the employee; it is an annual or short term policy. So, although these are often referred to as rules, the Anderson Principles are just a guide. But what they do provide advisers with is some useful parameters when discussing the tax treatment of the policy. It’s also worth noting that where the business is a partnership or a sole trader the rules are broadly similar; however, the relevant tax is income tax, not corporation tax. If we take each of the principles in turn we can get a better understanding of whether tax relief may or may not be available. Let’s have a look at sole relationship. The sole relationship between the business and the life assured must be that of employer and employee. Non-shareholding directors are considered to be employees. If however the life assured has a significant shareholding tax relief may not be given. A significant shareholding is generally considered to be one over 5%. This is also sometimes referred to as the wholly and exclusively test, because to receive tax relief the premiums must be wholly and exclusively laid out or expended for the purposes of the trade. This means that if the life assured has a significant share in the business the test will be failed. This is because the policy is partly for the life assured’s own benefit. Tax relief could also be disallowed where a parent company insures a key person in a subsidiary or associated company. Next we have loss of profits. The purpose of the policy must be to meet profits lost from the death or critical illness of a key employee. If the policy is taken out to protect the debts the policy fails the principle. A policy with a surrender value would break the principle because part of the premium goes towards the investment element. A convertible term policy also fails the principle due to the conversion option giving the policy a purpose other than protecting the loss of profits on death. And then we have short term. The policy must be an annual or short-term policy. The industry typically assumes that a short-term policy means five years; however, HMRC have recently stated that the insurance term should not extend beyond the period of the employee’s usefulness to the company. This simply means that the term of the policy should reflect the period of time for which the individual is key to the business. For example, if the individual was key to a 10-year contract with 10 years to run, a 10-year term would potentially be the appropriate term for the policy. We then need to consider the tax treatment of any policy claims proceeds. The general rule of thumb is that if tax relief is given on the premiums then the proceeds will be taxed; however, this may not always be the case. The policy may be put in place to protect the profits of the business, the term could be appropriate; however, the life assured could be a significant shareholder. In this situation tax relief would not normally be given. However, it would be reasonable to assume that the proceeds would be considered a trading receipt as the policy was in place to protect the profits. Even though no tax relief was received the proceeds could be taxed. In reality what this means is that a company cannot decide not to claim relief on the premiums in the hope that there will be no tax on the proceeds. Relief on the premiums depends on the premiums being deemed as a business expense. This is not affected by whether the expense is actually claimed or not. Similarly, the benefits will be treated as a trading receipt if they are treated as replacing profits. It’s always good practice to recommend that your clients or their accountants clarify the position with HMRC. Whether or not tax relief is given on the premiums should not really be the priority when putting key person cover in place; the purpose here is to protect the business’s profits or debts against the death or critical illness of a key employee. PRESENTER: So, from what Robert was saying there, this sounds like a complicated area. Could the company’s accountant help out? STUART HALLIWELL: It can be complicated, but at the end of the day we’re just talking about term assurance and in some cases a trust form. And, yes, the accountant can be a real help and needs to be involved especially around the tax implications and how they could affect the business. Robert talked about the Anderson Principles and it’s our job to let the accountant know or at least get the company to talk to their accountant about what we are putting in place so they can make any adjustments from a tax perspective. PRESENTER: And Robert mentioned debt there. I assume having debt is every bit as worrying as the loss of a key person in one of these situations? STUART HALLIWELL: It certainly can be and a lot of the time when we’re talking about debt people think of mortgages or bank loans, formal longer-term arrangements, but the corporate debt landscape is really quite varied. Corporate debt is fairly common for businesses, as you would expect, and in our research just over half of those surveyed said they had some form of debt. Another increasingly popular source of funding is director’s loan accounts. This is where the director lends their own money to the business and can prove a cheaper and easier option than going to the bank. It could be due to a lack of available borrowing from the bank or that they’ve chosen to use their own money for the initial startup or expansion. For those with borrowings over £50,000 almost a third have a director’s loan account. Just over four in 10 of the SMEs we talked to had borrowing between £50,000 and £800,000 and the average was £176,000, so not an insignificant amount and one that could cause a business major cashflow issues if it needed to be repaid at short notice following the death of a key person. The bank could recall its loans or if the funding was via a director loan account the director’s family would want repaying. PRESENTER: You mentioned there some 29% of businesses I think, almost a third making use of DLA, but certainly that’s got to be a cheaper and easier way for businesses to raise funds than going to the bank. STUART HALLIWELL: I agree, assuming the directors have spare assets or cash that they can call on. This money could come from their own cash or via assets loaned to the business or from remuneration and dividends not yet taken out of the business. Quite often this money is lent to the business on very favourable terms and so is much cheaper than the company could get from other forms of borrowing. But, as I say, it does depend on the directors having spare assets or indeed raising this money via their own property. The issue we found with these loans was that worryingly 28% of the business owners who had one were unaware that these had to be repaid on death. And for those who knew that they were to be repaid there wasn’t much evidence that they had any business loan protection to cover them. Begging the question where would the money come from if they needed to find it to repay these loans? At the end of the day this money belongs to the director and repayment can be demanded at any time, including upon death. If a director were to die and with an outstanding director’s loan account it isn’t unreasonable for the estate, their family to expect that those funds would be repaid promptly. Business loan protection can support this and ensure that the funds to repay the debt are made available to the company when they’re needed. Mortgage advisers are in a great place to spot this opportunity. It’s always worth checking for the reason for loans on any application forms. If the reason for borrowing is to raise capital for business use then it’s likely that they are making a loan to their business and protection is needed. Personal protection may not help the business as the widow could still demand the repayment of the loan from the company, even though a personal policy has already paid out to her to cover the loan against their home. PRESENTER: And I guess a good percentage of these loans are raised against private mortgages? STUART HALLIWELL: That’s correct. And it’s also worth noting that personal protection may not help the business. The estate could still demand the repayment of the loan from the company even though a personal policy is paid out to cover the loan against the home. The company still effectively owes the estate the amount of the director’s loan account. The protection needs to be in the right place to ensure both the business and personal obligations are met. PRESENTER: So if there’s a mixture of different types of lending and commercial borrowings, even a director’s loan account in there somewhere, what sort of security or guarantee are owners having to give? STUART HALLIWELL: It was a surprising area of the research with many business owners putting their own wealth at stake to provide cover or security for their own business borrowings. We found that 35% had used personal guarantees and 14% had taken a charge against their personal property as security for their borrowings; yet only two in 10 had used any insurance policies. This highlights the lack of awareness of business protection and shows the opportunities we have for businesses to protect themselves against those unexpected risks rather than risk all of their personal wealth or their house. PRESENTER: So do you think all businesses need key person cover? STUART HALLIWELL: The simple answer to this is no. If you take Legal & General for example then the loss of no single person will have a terminal impact on our business and the same is true for many very large organisations. But with a smaller business this is more likely to rely on the skills and abilities of a few individuals for the survival of the business. The age of the business can also have an effect on the need. As part of the research we looked at how the protection need of a company changes as it grows. At the various stages of its development the need for protecting it will change effectively through its lifecycle. This can give advisers some real useful insight and they can make various assumptions depending on the age of the business they’re going to see. It can help tailor their approach to the various areas which would have the biggest impact for that particular business. PRESENTER: So it’s really important to look at businesses from a lifecycle point of view. STUART HALLIWELL: It’s a general rule of thumb, but it does tend to work. So, for example, in the early stages of initial development the business may be reliant on just a few key people trying to get established. Here losing a key person could be disastrous and so insuring them is vital. Then as the business becomes more established the use of loans and financing will play a bigger part as they invest and grow, so the focus may move from key people to covering the business debts. Finally, as it moves to an established position and towards maturity then the continued ownership of the business will be a bigger point to consider. The owners may be more concerned with protecting its value or boosting their retirement planning, so share protection might become more important to them. But as with all things it will depend on the company you’re talking to, what they do, how they are structured and their own priorities. PRESENTER: So what are the questions that advisers should be asking a business owner to establish who the key people are and what happens in the event of death how it could affect them? STUART HALLIWELL: One of the simplest questions we can ask a business owner is, how long will your business survive without you or without your best salesperson or without your production manager? Before you ask these questions most people will not have given it any consideration. Unfortunately, very much like personal insurance, death or critical illness and its implications are not common topics of conversation around a board table, but it should be, along with what will happen if the office burns down or the computer system crash, which are typically part of any disaster recovery plan. Let’s face it if a computer or a building can be replaced or rebuilt, the same is not always the case if a key person or a business owner dies. You can then go on and ask, how would their creditors react, would they be understanding or would they be nervous and demand repayment; what about their customers, will they stay loyal or might they look to go elsewhere for their goods? We’ve actually put together a business risk questionnaire, a short list of relevant questions that advisers can use with their clients to help the client realise the risk that they could be running and so help the adviser recommend the right solutions to them. PRESENTER: Well, if there’s a lack of awareness out there amongst SMEs, how can you help advisers to approach them in the right way? STUART HALLIWELL: The best piece of advice I think I can give advisers came from our research and it was that of all those with any business protection 73% had taken cover following advice. So we need to be proactive and go out and talk to businesses. If you want to get into this market then you have to go out and talk to business owners and show them the risks they could be running and then the solutions we as an industry can offer them to protect their families, their businesses, their staff and anyone who has a financial stake in their business. We really want to help them. We’ve also published a Guide to Business Protection in partnership with the people from the Rough Guide organisation, which is designed to highlight both the risks and the solutions to business owners. Advisers can download it from our website and forward it on to their clients to help with their client meetings. PRESENTER: Any other support that you can give to advisers, either ones that are new to this market or already operating with business clients? STUART HALLIWELL: It’s what we do every day. We can offer lots of support to advisers looking to explore the subject in more depth. We run training workshops to cover every possible aspect of business protection, ranging from the marketing side through to the technical side of writing policies through to articles of association and understanding company accounts. All of our sessions are approved by the CII for CPD purposes, and we also have regular half an hour webinars giving an overview of various aspects of business protection. Advisers can also get in touch with our dedicated business protection team through their usual Legal & General contact or via our business protection website. And our website features a range of useful calculators as well as sales material, case studies, technical information, all of which can be downloaded and used in advisers’ own marketing. In addition we have a range of video interviews with business owners who have interesting and relevant stories and also give their views of the benefits and need for protecting their businesses. Finally, if anyone has any questions following this session they shouldn’t hesitate to get in touch with us. PRESENTER: Stuart Halliwell, thank you. STUART HALLIWELL: Thank you. PRESENTER: In order to consider the viewing of this video as structured learning you must complete the reflective statement to demonstrate what you’ve learned and its relevance to you. By the end of this session you will be able to understand and describe the need for key person cover; how to set up key person cover for different types of business; the treatment of premiums and policy proceeds for taxation purposes; how to identify key people within different kinds of business; how to calculate the appropriate sum assured for key person policies; business demographics and attitudes when it comes to key person cover; and how certain businesses can use key person policies within their sales process. Please complete the reflective statement to validate your CPD. Insert disclaimer