Co-Directors Insurance

Co-directors insurance allows the directors of a limited company to provide funds to purchase the share of a deceased shareholding from their personal representatives. The life assurance contracts are affected by the shareholders personally. This ensures the surviving shareholders retain control of their business.

How are the premiums paid?

There are two options:

  • By the directors out of “Net” income
    • Salary increases, to cover cost, is allowable against Corporation Tax liability
  • By the company on behalf of directors
    • Premiums are fully allowable against the company’s Corporation Tax
    • BIK (Benefit In Kind) liability for directors
    • This is most commonly chosen option

This form of cover is known as traditional co-directors insurance, however there is a more cost effective way to implement this type of cover known as ‘Private Company Shareholders insurance’. Once the company meets Revenues criteria the premiums can be borne by the company without BIK liability to the directors.