Shareholder Protection Insurance Cover


CASE STUDY: A secure family future utilise tax efficiency through a limited company

Posted March 9, 2020

The situation

Richard* came to Watts because he was no longer getting sick pay and Death In Service insurance since becoming self-employed. His wife, Wendy is a school teacher earning £32k and they have two young children.  As a family they were worried about what would happen if one of them got ill. Especially their ability to pay the mortgage, monthly bills and keep doing the things they feel are important to their family.

The solution

Following a full review of their financial situation, Watts Mortgage and Wealth Management was able to recommend a Life Insurance plan that benefitted from tax relief using his Ltd Company; giving the family peace of mind and better financial security.

Clever life cover

We started by securing £500k of life cover for Richard up to the age of 65. By paying for his life cover and pension contributions through his limited company salary, Richard was able to make the most of his tax allowance. We were therefore able to secure 40% tax relief on his life cover — providing the financial peace-of-mind they needed, whilst also being able to set aside some family savings. By sacrificing Richards salary to meet the cost of the life cover and pensions, Richard was able to retain 100% of their child benefit.

In addition, we created a Life and Critical Illness plan for both Wendy and Richard, which would fully cover the cost of their mortgage in the event of serious ill health or death. This plan also secured £70k of cover for each child — which was a huge weight off the family’s mind.

Tailored Income protection

Richard’s new self-employment status meant he had no access to sick cover and no income protection. The family did have some savings, and through Wendy’s teaching job, she had access to 12 months of paid sick leave which would tide them over in the short term. However, this was not enough to maintain mortgage payments should one of them fall ill.

We tailored an income protection plan for each of them to provide total security. Richard will be able to access £2,000/month tax free after 13 weeks off work, and Wendy can access £1,200/month tax free once her paid sick leave of 52 weeks runs out.

Peace of mind

As Wendy already has a Death In Service benefit and dependents pension provision, we advised them not to spend any extra there.

Wendy and Richard now have total peace of mind, knowing that their family’s future is more financially secure – whatever comes their way.

Speak to Watts Mortgage and Wealth Management today to see how we can help protect your family should the unexpected ever arise. Call us on 01270 620555 or contact us here.

*Names have been changed for the purposes of this case study