Setting up death in service for a new company
We were approached by Mr B who had set up a new company which was in the process of being incorporated in the UK. He was also in the process of opening a UK bank account which was taking a long time due to a lot of red tape.
What is incorporation?
Incorporation is the process by which a new or existing business registers as a limited company. A business cannot operate as a limited company until it has been incorporated at Companies House under the Companies Act 2006. Gov. UK February 2021
The New Company was incorporated with Mr B as the first employee. The parent company was based in Poland, and sister company in the US. The US side of the business provides its employees’ with benefits such as sick pay and death in service, and our client told us that he wanted cover to match the benefits provided by their company scheme.
Our client’s role within the business was IT Business Development Manager.
Our Process and advice
At Future Proof, we have access to specialist insurance companies who don’t deal directly with the public. These companies offer more specialised policies, designed to provide cover where other major providers can’t.
Our research process involves us contacting many insurers to find out the best possible outcome for our clients. Which avoids any nasty shocks later on during the underwriting process.
Would the insurer add a ‘loading’ to their standard premium? (this is an additional sum charged on top of their standard monthly premium to reflect their additional risk). Or, exclude a condition?
Might they decline the application? We want to avoid wasting time by making applications which may be declined.
We have up to date knowledge of the ever-changing landscape of underwriting for most UK providers. Future Proof is committed to thorough research so that you don’t have to. What’s more, our advice comes at no obligation and with no hidden costs.
Our research led us to one very competitive insurer for death in service cover also called relevant life cover).
The Death in Service sum assured was £620,000, to run until retirement age of 70 with company A. Owing to the amount insured, the insurer required our client to undergo a medical examination which was arranged very swiftly. Once the medical information had been received, they made their decision and offered their policy terms quickly.
When it came to Executive income protection (Exec IP) company B offered the most comprehensive cover and competitive premium.
Exec IP was arranged based on a salary of £116,250 per annum until the age of 65 (matching the US employer benefits) not indexed.
With company B, the amount to be insured did not affect the underwriting and a medical was therefore not required, so long as the applicant did not have any medical conditions. Due to the fact that there would be no medical, the turnaround time from application to the decision would be incredibly swift.
Many insurers limit the amount you can insure for death in service
Company B offered a high amount of cover for executive income protection. However, many insurers limit the insurable amount to 75% of salary – Company B stood out to us as they were happy to insure 85% of our client’s income with no medical requirement.
With a UK bank account pending, the two providers were happy to accept the first premium from within the UK or the US, as long as future payments would be collected from a UK bank account.
The delays in setting up the UK bank account were not improving, so we struck upon an idea to have the business pay the first premiums as an annual premium.
Whilst you are welcome to get a quote online, we would recommend you speak to one of our advisers.
Any quote that your adviser provides you with will take into account your circumstances and medical history, as well as your budget!
An online quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.
Call Freephone 0800 644 4468 – Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.
Interested in related stories?
Take a look at our handy guides ‘What Cover is Right for me?’
Do you suffer from a medical condition and concerned you can’t secure Life Insurance? Please view our ‘Medical Guides’ for further information.
Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success. All applications are subject to underwriting.
Links to third-party websites exist for information only, and we accept no responsibility or liability for the information contained on any such sites.
The existence of a link to another website does not imply or express
endorsement of its provider, products or services by us or St. James’s Place.