106. Business Protection with Naomi Smith

In this episode  we are joined by guest Naomi Smith from Saltire Financial. With years of expertise in business protection, Naomi sheds light on the crucial steps women in business need to take to ensure their financial well-being. Here's what you can expect from this informative and empowering episode:

• Importance of business protection in safeguarding family members and employees during challenging times
• Understanding private medical insurance and executive income protection for limited companies
• Exploring group private medical insurance options for directors and employees
• Overview of relevant life insurance and executive income protection
• Sole traders vs. limited companies 
• Exploring shareholder and loan protection for seamless business continuity in case of illness or death 
• Key person cover and its role in mitigating financial impact caused by the absence of a key person in the business
• Understanding director's loans and their implications in case of a deceased director

GUEST EXPERT: NAOMI SMITH has always felt a strong passion for business protection. Understanding the significance and potential benefits it provides, she became determined to spread awareness about its importance. Naomi observed that many people lacked knowledge about the meaning, purpose, and offerings of business protection.

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YOUR HOST

Julie Flynn is an experienced independent financial adviser and financial coach. Justice and equality drive Julie. Which is why she’s spent years studying and researching how stress affects our financial decision making. Julie is best known for her work with women who have lost their partner and coaching financial services business who want to implement fair and transparent charges.
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CO-HOSTS
Emily Pool is a Financial Planner and Will Writer. She is passionate about empowering people to invest their wealth (pensions and savings) sustainably and in line with their personal values.

Michelle Lambell  started her career in financial services as a Stockbroker in 1999 undertaking both advisory and discretionary investment management. Today she is a Chartered Financial Planner, specialising in retirement planning advice, pensions and investments and a Certified Financial Coach. 

Sara Walker is a financial planner and financial coach with 33 years’ experience in financial services. She wants all women to feel financially confident and uses her professional and life experiences to support and educate women over 40 so they in turn feel able to support and be role models for the younger women in their lives. 

Transcript

Welcome back to this new episode of the Women and Money Cafe.

Julie [00:00:35]:

Now today, I'm ably assisted by Michelle, who's at one end of the coach. How are we doing, Michelle?

Michelle [00:00:41]:

I'm good. Thank you, Julie. You, okay? I'm great. I think we was

Julie [00:00:44]:

all know how good I'm doing, don't we? I do very well, listeners. I'm really happy. Just a long throw, Michelle. And so if we've got Sarah.

Sara [00:00:53]:

Hello, everybody.

Julie [00:00:55]:

Alright. How are you doing, Sarah?

Sara [00:00:56]:

I'm alright. I'm just a little bit blinded by the teeth and the grin, but I'm okay.

Julie [00:01:02]:

That's not helping. And then we've got a lovely guest with us today. We've got Naomi Smith from Saltire Financial. So, Naomi, welcome to the cafe.

Naomi Smith [00:01:15]:

Hello, everybody. Thank you. Thank you for having me.

Julie [00:01:18]:

Alright. It was an absolute pleasure. So listeners, I think it was about a month or so ago, I met Naomi at an event. We got chatting. And I realized she has expertise, and knowledge, and skills, and talents, and stuff the rest of us don't have. And I know that's hard to believe because we're an incredibly talented bunch. But, Naomi, you specialize in an area that's really, really important, but it's spoken about that much. Do you want to tell us a little bit about what it is you do?

Naomi Smith [00:01:47]:

Yeah. So I do protection basically. So as a firm, we offer personal protection and business protection, But me personally, from the advisers, I specialise in business protection.

Julie [00:02:03]:

I know. And this is not something that I think Is it fair to say, ladies, we don't do this on a day to day basis?

Naomi Smith [00:02:10]:

Yeah.

Julie [00:02:11]:

And it is super, super important. So I'm like, I'm really glad you've come on to talk to us about this, Naomi. But tell you what, because we're nosy, right, do you want to tell us a little bit about yourself, first of all? Yeah.

Naomi Smith [00:02:24]:

And I think you probably all sat there thinking, why does she just do protection? And I think I think the background story will almost kind of answer that as well. So yeah. So I live in Dumfriesshire. I've got a 3 year old. That's my child, not my husband. And I have been doing protection now for about 4 years, but Saltire Financial is my own firm which launched in March this year. So before then, I did personal protection for another firm in the North East. And then when I've Started my own.

Naomi Smith [00:02:59]:

I have got this inner burning passion for, business protection after I understood exactly what it stood for and what it offers, And that it is just not known. Like there is so many people that don't know what it means, what Its purpose is, what it offers, and, do you know ladies, when I launched in March, I did say to my universe I'm a very strong believer in my universe. I did say that I will be the biggest business protection firm in Scotland. That's and I it's scary, but it will happen. Right? And I think it's purely because I, Yeah. I just feel dead passionate about it. Alright.

Julie [00:03:46]:

Okay. And I think you know, it's interesting because we've had on, in previous episodes, Catherine Knowles, Who is like a protection guru as well. And she's been able to talk to us about income protection and life cover. And I think from a financial point adviser point of view, The products are pretty simple. Like, understanding the product is pretty simple. But when you've got someone that's an expert like Catherine or someone who's an expert like you. The difference it makes for clients is phenomenal. And that's why I'm really pleased that we that you've agreed to come and chat with us today.

Julie [00:04:20]:

But you've going to hinted a little bit there, Naomi. Now I'm a financial adviser. And my instinct when someone says they feel really passionate about business protection is okay. Each to the road. It's a bit like when Michelle gets all excited about pen pensions. I'm like, okay. But you have going to hinted that there's a backstory there. Would you be comfortable sharing this story with us?

Naomi Smith [00:04:47]:

Yeah. So, I think it all kind of transpired from, the firm that I did my training with. It all happened through COVID. So, I was obviously in the northwest. They were based in the northeast, and, It was all done via Zooms. So I was meeting new faces via Zoom. That was all fine, but then restrictions started lifting. I went over to the office more.

Naomi Smith [00:05:17]:

We went on, like, stuff nights out more, and I just learned very, very quickly that they weren't really my going to people. I'll let your imaginations kind of do the talking there if you just think, insurance people, not my going to people. Right? And I'm family orientated. I don't think I need to say anymore. And basically, I thought. I can't have myself representing a firm where the morals and the values just 100% weren't in alignment with mine. So I needed an out. And, again, my universe presented me with an opportunity where my network basically gave me an opportunity to go on my own And keep my clients, which never happens.

Naomi Smith [00:06:02]:

Right? There is a much bigger backstory but I'm not going to bore you with that. So With that in mind, it made me appreciate more what I did because I could see what other advisers were doing. I could see what that firm was doing. I completely disagreed, with the going to, journey that they were going on and What they were wanting to achieve. And it was funny because one of the, main people actually said to me the path I should go down with my business and what I should be doing. And I was like, are you really saying this to me? Are you really trying to tell me to be like you? I don't think so, mate. So, So yeah. So it just gave me this more of a inner fire to do the right thing, which was to create a firm With the morals and the values of exactly what I believed in, and alongside that, when you have your own business, ladies, and you're trying to, build an empire.

Naomi Smith [00:07:00]:

Your little imagination's gone a 100,000,000 miles an hour. Right? And it you're having, like, ideas at 3, 4 o'clock in the morning. And I just found this this, going to empty space of Nobody or very few people understood the value of business protection. Now I was about to launch my own firm, which in itself was a bit of a mean feat. Thanks to the FCA. We all know how amazing and very quickly they do things. So, so when I launched, I was like, right. I have this feeling that business protection is where I need to be from a longevity point of view because it's a hole in the market that nobody understands.

Naomi Smith [00:07:44]:

It's a hole in the market that some businesses have, but they maybe don't fully understand it themselves. It's a hole in the market where, I feel like advisers don't like advising on it Because and I don't know whether it's because they don't fully understand it. I've just basically said to Julie there, when I first did my training for it, I didn't have a foggy clue. I was like, I do not understand this. What is a relevant life insurance? What is an executive income protection? Because as you've hinted on there, Julie, life insurance is death, critical illness is critical illness, income protection is income protection. But then you're presented with the business version, which is, like, times 10 of lots of different options. And what do you do in the right scenario for that business? Yeah. I went on a bit of a tangent there.

Naomi Smith [00:08:34]:

Sorry.

Julie [00:08:36]:

Nope. That's absolutely fine.

Naomi Smith [00:08:39]:

It did answer your question.

Julie [00:08:40]:

It did answer my question. It did. And I think that's why we need you to come and talk to us about this because yours just popped into my head. Sarah, Michelle, you're going to back me up on this, aren't you? I think. How many times have you seen in a group for financial advisers coming on someone coming on and saying, why can't I have critical illness on a relevant life plan? Like, that's a really common question that you see. And it just shows that although the products are simple, because we don't use them every day, you You'll occasionally get someone go, well, why can't I have critical illness and irrelevant life plan? Listeners, don't worry. You don't need to know what this bit is because my next question by no Naomi then is like So for the women listening to this podcast that are running their own business or they've got they they've got family members that are running a business, Can you just going to give us a broad overview of what you mean then when you say business protection?

Naomi Smith [00:09:34]:

Definitely. And I think we need to, 1st of all, establish what that looks like in regards to a business. So if we start with a sole trader, for example. So if you are a sole trader, You can't put business protection policies through it, through your business basically. There is ways and means around having like an income protection, So you're protecting your income, you know, fracture hospitalisation plans, etcetera, but you can't physically put them through your business as an expense. Okay. And that's purely down to and, disclaimer, I am not an accountant. Just saying.

Naomi Smith [00:10:13]:

But it's purely down to tax purposes and how the tax is dealt with on the other end. So when it comes to business protection, you need to be registered limited company, For the reasons of, these policies are in situ, to either help from a tax efficiency point of view Or your business is going to be set up in a way where you will have people within the business that need to be protected. So I think it's important to understand what type of business You need to have, to going to be thinking about these. Okay? So if you've got a limited business, this is where you need to be thinking about business protection Because there is 100% something in the panel of products that you will definitely need in some way, shape, or form.

Julie [00:10:59]:

Quick question Yeah. If that's alright. Okay. So sole traders, not for you. Limited companies, definitely for you.

Naomi Smith [00:11:05]:

Yeah. What about partnerships? Yes. Same. So partnerships as well, it is, it's a little bit more complicated, because a partnership setup is more complicated than a limited setup, but there will still be percentages of shares of the business split between So many partners within the firm that if something happened to any of them, death critical illness, the partnership will need to be protected.

Julie [00:11:33]:

One moment. Thank you.

Naomi Smith [00:11:35]:

Okay. So yeah. So from a product perspective, so if we talk about relevant life insurance. So let's make it simple here. Let's say you have a limited company, with 2 directors. Both directors, the business is split 5050. Okay? Now say if director a died, director a's shares will automatically They go to director a's beneficiaries whether that's wife or children. Now director b might not want those shares to go to the wife because then the wife is entitled, like, oh, I just So the shares would automatically go to the spouse or the children, And director b might want to then, buy the shares back, but the capital might not be in the business to be able to do so.

Naomi Smith [00:12:33]:

Okay? So this is where, the, life insurance comes into play within a business. Okay? So with a relevant life insurance, a relevant life insurance is basically a policy that is owned by the business. And then if that person was to die, that amount of money will go to that person's beneficiary. Okay. And then, but with that in mind, the policies that I do, I also put into trust Which basically means that that amount of money will get paid to the beneficiary, but it won't enter probate. It won't form part of the estate and, could be relieved from inheritance tax depending on the scenario as well. Okay. So it's almost like a relevant life insurance.

Naomi Smith [00:13:27]:

I would 100% say is a private debt in service. That's probably a simple way to put it.

Julie [00:13:33]:

That That is a really simple way to put it. I like that. Alright. So it's a one off death in service benefit.

Naomi Smith [00:13:38]:

One off death in service benefit. And you can have it for the directors, you could have it for say the management team. I've got a client who has basically said as the Part of an employee benefit, he wants to offer it to his management team. So the business owns the policy. The person chooses who they want that money to go to, and then I'll put it into trust so it doesn't form part of their estate and it skips probate. K. Relevant life insurance. Do you want to keep going?

Julie [00:14:09]:

I'm trying to think what my question is. I know I've got one. Sarah, Michelle, do you know what my question is?

Sara [00:14:16]:

I was just going to say about the cost of the premium.

Julie [00:14:19]:

That was my question.

Sara [00:14:21]:

Who pays and the benefit to the business?

Naomi Smith [00:14:23]:

Yeah. So in regards to the premium, so the premium is affected by lots of different factors, And that depends on any going to health history, any medical disclosures of what's going on with the person at the time, Which is a part of the process of me finding out when I do the application, if they're a smoker, if they're a non-smoker, All these things come into play. So I can't say to you that if you wanted 200,000, relevant life insurance, it would cost you £20 a month because it genuinely depends. Age is a factor. BMI is a factor. There's so many different factors. What I will say is though that with a relevant life policy, you can offset it on the other end. So you it can actually potentially reduce your corporation tax liability.

Naomi Smith [00:15:12]:

So whatever that premium is, It's super important to even just have it in your business as an expense because you can put it through at the other end.

Julie [00:15:21]:

Okay. So let's take me as an example. I decide that I want some life cover. I can go and get life cover from anyone, and I pay it personally. Mhmm. Or I can take it as a relevant life plan, and I can put it through the business as an expense. And the business is paying the premiums?

Naomi Smith [00:15:38]:

100%. Yep.

Julie [00:15:40]:

So the business owns the policy. I'm just I just happen to be the life assured. Yep. So That money the cost of the life insurance is not coming out of my net pay instead of it's coming out of the business's gross profit, and it's reducing the corporation tax.

Naomi Smith [00:15:55]:

Exactly. But what I know is that not every adviser can sell the relevant life insurance to put through your business. You have to have your business license Your business protection license. Oh. So you can't put what you're talking about there, Judy, is a personal life insurance. You can't put a normal personal life insurance through a business. It has to be a relevant life insurance.

Julie [00:16:21]:

Alright.

Naomi Smith [00:16:22]:

Two different types of policies.

Julie [00:16:24]:

Okay. Cool. Thank you for that. Anybody else know what else I'm going to ask? Ticket. Everybody's turned the telepathy off today. That's nice. It's you've all been blinded by my smile, I know. Okay.

Julie [00:16:42]:

So is there anything else we need to know about relevant life?

Naomi Smith [00:16:45]:

I don't think so.

Julie [00:16:47]:

Okay. Who are the people that's most likely going to be suitable for this, do you think? Your typical relevant life person, what do they look like?

Naomi Smith [00:16:58]:

Business owners, directors, if you've got, as I've said before, a management team where you want to feel like you're giving them an employee benefit to their package, so you're wanting to make them Feel appreciated for what they're doing. Literally anybody because in all honesty, the reason why people have these policies is for tax efficiency. That's the main reason why somebody would put a relevant life through their business. And if they have A spouse or if they have children, then at the end of the day, it's almost a Brucey bonus because they've got this life policy that'll be able to pay out to the beneficiaries, as long as they're working for that company, basically.

Julie [00:17:42]:

Alright. Okay. That's really helpful. Thank you. So Then I suppose my other question would be I tell you what. I'm going to let you decide where you're going next because I might be still in your thunder with asking the questions. So if we've got this sort of array of different kinds of protections that businesses can use, we've talked about one there, which is relevant life. Yep.

Julie [00:18:05]:

What other options are there available for businesses?

Naomi Smith [00:18:08]:

So from a side step, I'm going to stick with life insurance, but do a side step. You've then got, shareholder and loan protection. So it's still a life insurance, but The biz the business owns the policy, but the money gets paid to the business. So, basically, the idea of business protection is that we are Manually protecting the business in the instance of death or critical illness. So if that key person, director, shareholder were to die or get to Cleo. How would that affect the business? So I mentioned before with the shares. So say you had 2 directors 50.50 shares. If one of them died, you don't want their shares to go to their wife.

Naomi Smith [00:18:49]:

You want to be able to buy the shares back and bring them back into the business. So then say director b had a 100% of those shares then. So the question you then need to ask yourself is that if your business is set up in that way, So if you have more than just you and it's split, if one of those directors or shareholders were to die, Does your business have the capital to buy those shares back? And if the answer's no, this is why you need a policy in place To be able to provide the capital, bring it into the business so those shares can then get bought back into the business. And then, The spouse or whoever ended up with the shares has then got the money in the bank.

Julie [00:19:30]:

Alright. So let's take let's take this as a real example. Michelle, I've got really bad news for you. Right. You're in business with me. Right? We are we are codirectors of a business. So playing that out then, Naomi, let's say Who would you want to die, or do you want me to die, Michelle?

Michelle [00:19:51]:

I can die. I thought I thought that's what was coming.

Julie [00:19:54]:

Alright. Okay. You're okay with that. Alright. So even though she's younger than me Yeah. We've bumped Michelle off. Like, Michelle, as it stands at the moment, what's going to happen with all your shares? Who who's getting all your stuff when you're dead?

Michelle [00:20:11]:

So my husband and my 2 daughters.

Julie [00:20:14]:

Oh god.

Naomi Smith [00:20:16]:

And you know what they're like.

Julie [00:20:17]:

Right. So Michelle has now died. Obviously, I'm a little bit gutted that, You know, my co director and my friend is dead, but I'll get over it. But now I'm trying to run the business on my own. Yeah. And I've got Jay and your daughters who are now, like, they have an equal stake in the business. Yeah. And let's say one of them decides they're going to try their hand at this financial advisory stuff because we know one of them is tempted.

Naomi Smith [00:20:45]:

And they could. So with shares in the business, they have rights. So they would be able to, but you might not want that to happen.

Julie [00:20:53]:

So I don't think Jay is going to be terribly interested, has he?

Michelle [00:20:58]:

No. But you you'd have a job on your hands with my little one.

Naomi Smith [00:21:01]:

Right.

Julie [00:21:02]:

Want to be an adviser. So I've got 2 disinterested shareholders, and I've got 1 and you know what young folk are like? You know, they know everything, don't they? We're going to come in and tear up the business with all their fresh fancy ideas. I'm going to have a nervous breakdown, and I'm going to go offset.

Naomi Smith [00:21:19]:

Rocking in the corner.

Julie [00:21:22]:

Right. So what you're saying is, Naomi, that this is going to avoid this situation.

Naomi Smith [00:21:28]:

100%. Because you might be sat there saying, right. Well, I'm in a bit of a sticky situation because I don't want this, but the business hasn't got the capital For me to buy the shares off of the child who wants to be an adviser.

Julie [00:21:45]:

I suppose the flip side of that as well is that Jay and the kids Might actually not want a share in a financial advisory firm. They might have preferred a big lump of money.

Naomi Smith [00:21:57]:

Exactly.

Julie [00:21:58]:

Right. Okay. So this is just saving everybody's blushes, isn't it?

Naomi Smith [00:22:03]:

I think so. And it's, but, again, it's something that people don't think about because, honestly, when I go in and do reviews, say it's a new potential client, they'll say, it's fine. We've got a contingency plan in place. So they've got a contingency plan. They might have cross option agreements that state in writing done by solicitors to say exactly what happens, Who gets what shares? Brilliant. But is the capital there? Because 90% of the time, it's not.

Julie [00:22:33]:

Right. Do you know what? I can see how this would this could potentially create a false sense of security for some people because they've set up the business. They've gone to a solicitor. They've got all the legal documents, and they think they've done everything right. Job done. Yep. And nobody's pointed out to them, yeah, but where's the bloody money coming from?

Naomi Smith [00:22:51]:

Because you could be talking of a business, I don't know, to say the business is valued at half a million, that would be $250 the business would have to find. That's not that's not easy all the time.

Julie [00:23:04]:

That's not loose change, is it?

Naomi Smith [00:23:05]:

No. Exactly. So, yeah, it's being really savvy, And you've made a very good point there that, to be fair, it's like personal protection. The amount of people that I did a post on it the other day about it because it really annoys me. That, if you go to somebody and say, you know, have you got life insurance? They'd be like, yeah. Yeah. I've had it for about 10 years, you know, got it cheap, all of this. That's brilliant.

Naomi Smith [00:23:28]:

Have you had it reviewed though? No. Don't need it reviewed, it's fine. So how do you know that the sum assured on the life insurance 10 years ago is right for your needs right now? Like how do you know that? And it's the same in the business. So they fully think everything is in situ when actually, if something was to happen, They will then be presented with a situation where they're like, right. Well, how are we going to find this money? Is it going to be a case of director's loans or some businesses have to fold to be able to afford the shares if the family want the money because they might want the money. They might not want the shares at all.

Sara [00:24:06]:

I've got a question for you, Naomi. Mhmm. So if the value of the business is potentially going to grow, so If you take out your policy today for your 250,000 Yep. And say Michelle didn't pass away until several years later and the business is worth more money Yeah. Is there a way of the having the sum assured gradually increase?

Naomi Smith [00:24:25]:

There is, and it's types of policies. However, You have touched on a point there, which is why I've decided to go down the business protection route. So with personal protection, you are protecting your liabilities. Right? In theory, the older that you get, those liabilities become less. So When you've got a mortgage, you're paying your mortgage off. So the sum assured is going to become less. With a business, a lot of times when somebody starts a business, they want that business to grow. So with the personal protection, you're reviewing them every say 2 years, but really there's not really a lot changing.

Naomi Smith [00:25:01]:

But with a business, you've got a relationship where I literally would have to see that business every 12 months because it's changing all the time, from a the value of the business, they might get more key persons in. That management team might look bigger. They may they might have a They might have a sales director that is bringing in 90% of the profits of the business. What if something happened to them? So that's why I wanted to make a thing of the business protection. I feel really passionate about it because These business owners put blood, sweat, and tears into growing these businesses, making them exactly what they want their to look like. Now I use the word empire loosely because to me, empire is however you envisage it. Right? Doesn't matter how big or small. It's still your empire.

Naomi Smith [00:25:49]:

It's still your baby. But then if you died or if you got critically ill or sick or injured, that could literally get rare pulled from underneath you in a split second, And your all that blood, sweat, and tears is gone. Done. Whereas I can walk in and say it doesn't have to be like that, and I can offer you the peace of mind To have the right policies in place, because at the end of the day, we do not know what's going to happen tomorrow. You might be the fittest and healthiest person, but you don't know what's going to happen tomorrow, and I've experienced that personally. Another reason why I love what I do.

Julie [00:26:22]:

Alright. So I think then so if we go back to the example where you've got me, Michelle, and, like, let's kill let's no. I tell you what. Let's make me really ill. Right? So let's say I'm critically ill, and I can't contribute to the business. Can we build in critical illness That will serve a similar function. So I like I'm like, I can't do this anymore, Michelle. The business is all yours.

Julie [00:26:46]:

You need to buy me out.

Naomi Smith [00:26:48]:

Yeah. So, in that instance, you would be talking key person cover.

Julie [00:26:53]:

Right.

Naomi Smith [00:26:53]:

So key person cover is a policy where a lot of the providers don't just do critical illness stand alone. It's usually life and critical illness when it comes to a key person. Okay. But a key person cover would, in the event of either death of yourself, Judy, or critical illness, A lump sum of money would get paid to the business for the business to choose what they want to do with that, But the main idea is that they can get a replacement. So a lump sum of money would get paid to the business where you could cover recruitment fees, You could relocate somebody because let's face it, there isn't going to be another Julie, is there?

Julie [00:27:36]:

God, I hope not. Never forget. I think we all hope that that is not the case.

Naomi Smith [00:27:42]:

But there will be somebody who has, you know, a very close skill set to you, but they're not going to be on our front door. So it's going to be a bit of a mean feat to find the person with the right Calibre of, knowledge and, experience like you have to be able to fill your boots. Right? So the business wants to know that the money is in situ to be able to get the business through that period because you now can't contribute. So it would be a case of either getting a replacement with that money or it's up to the business where it does with it, but that's essentially what it's designed for Through critical illness.

Julie [00:28:21]:

Right. So, Michelle, what you would have is a lump of money to go and pay someone to be really obnoxious on social media.

Michelle [00:28:29]:

And to grin at me when

Julie [00:28:30]:

we come on the Zoom first.

Naomi Smith [00:28:32]:

Yeah. She grins about my dog. And I come home. My dog is And he's very, very happy.

Julie [00:28:41]:

Oh. This is Julie.

Naomi Smith [00:28:44]:

Who's Julie, apparently? Yeah.

Julie [00:28:46]:

Yes. She is. Right. We're staying on track because we are the consummate professionals. Alright. So what we what we've touched on for us so far then is Relevant Life, Naomi. We've done shareholder protection, and then we've just covered off key person.

Naomi Smith [00:29:07]:

I would like to also very quickly do, Explain a little bit about director's loans because I don't think people are aware of that as well. So when you're in a business and, You have given the business a loan, so it's called a director's loan. Right? I don't think people are fully aware that If you have a director's loan to your business so say you've loaned the business a R160, but say you die tomorrow, The business owes your estate straight away the amount in that director's loan pot. So your business needs to have the capital of a $160 to pay into your estate because at the end of the day at the end of the day, your beneficiaries are owed that money. Does the business have the capital to do that? And I think it is more common on, conversations that I'm speaking to that directors aren't aware that that is the case

Julie [00:30:01]:

Mhmm. Or

Naomi Smith [00:30:02]:

it just falls with the business. It you know, it's fine. It's not fine. It's by law, it's law that the business will owe the person to stake that money. So this is where you would also need a loan protection, which is it's life insurance. The business owns a policy. The business gets the money Mhmm. Through a through a life insurance, but I'm more I wanted to point onto the fact of the whole the director's loan is owed straight away upon death.

Sara [00:30:32]:

Yeah.

Julie [00:30:32]:

Alright. I think that's a really good point. So I'm going to guess there's lots of people but I've taken the attitude of it'll be fine. The business will take care of them.

Naomi Smith [00:30:40]:

I die. The business will die with the business. Well, your family might not be thinking that when they're a160 ground out of pocket, and it should be in their

Julie [00:30:49]:

their pocket. Oh, that's really cool. Thank you for that. Michelle, do you have any questions for Naomi?

Michelle [00:30:55]:

Think one of the ones and this was something that actually happened to me. So in terms of business, obviously, when you've Got a limited company, and then maybe you're ill and you can't work. So I had the scenario where I actually had to have an operation, Which meant I had to be off work for quite a long period of time. And I didn't know even at that point. Even, you know, advice to business protection isn't something I do every day, but to have health care cover, which I obviously now have in place following that slightly late because I had to pay for that at the time. Mhmm. But to have it through the business, obviously, there's benefits to that, isn't there? And I just wondered if you to sort of cover that off for people.

Naomi Smith [00:31:38]:

I think, in that scenario, there's actually 2 different policies that I would be talking about, that we haven't mentioned. So one of which is quite rightly private medical insurance. So if we just tapped into that now that that could be, set up in different ways where it could just be, Say the directors have a policy. It could be a group private medical insurance where the directors could have a certain standard of quality, private medical, but then the employees are also included on that. Maybe a lesser standard, more of a basic cover. There's lots of different ways to get creative with it. But I think what's most important is that a private medical insurance policy It's also tax efficient for the business. So if you're a limited company and you run a private medical insurance through your business, It is a benefit in kind.

Naomi Smith [00:32:29]:

It is treated like a benefit in kind, but it can still be offset at the other end when it comes to your expenses. And private medical insurance is basically A way to skip the NHS waiting queues, private medical treatment can offer cancer treatment that the NHS can't offer you because It's too expensive, and it's getting seen in private hospitals, you know, private environments. And there is also policy providers out there that alongside a private medical insurance policy will offer a host of employee benefits, essentially. So money off things, if they wanted to get free cinema tickets, free coffees, money off Expedia, stays, Champneys Resorts, You know, basic think health and well-being. You can get a lot of RUSI bonuses to be able to offer your employees the same alongside that policy. And then I wanted to touch on executive income protection because I think that's super important as well. This is another policy that can be offset for your, Corporation tax liability, so it's good to note. But what this is, it's basically a private sick pay.

Naomi Smith [00:33:38]:

So I talked about a private debt and service. Executive income protection is a private sick pay. So it's a monthly benefit that's paid to the business, which allows the business to then pay that employee A sick pay. So when you hear of employees having a employee sick pay provided, Then if they had this policy in place, for example, they're not having to then pull it out of their own pocket. It's basically essentially getting paid to the business to be able to pay the employee. But I think when you're sick and injured, it offers you the peace of mind that you've still got a bit of income coming in. Because at the end of the day, if you're sick or injured, you've still got expenses to pay at home. Right? Now if it's you, just 1 director with your own business, I would 100% be saying get yourself an executive income protection because it's going to save your business money, But you're also offering yourself peace of mind that you're going to have a little private stick pay there as well in that instance.

Michelle [00:34:38]:

One. Naomi, am I also right in thinking, because I know this is something I have looked into in the past, that with that type of policy, it can also cover any pension contribution, which just being paid by the company.

Naomi Smith [00:34:49]:

So just to give you a difference, so, a personal income protection, You can claim up to 60% of your income. A executive income protection, you can claim up to 80% of your income, And that includes National Insurance contributions and pension contributions as well. So, actually, in the grand scheme of things, you're looking nearly your full Your full salary, really, once it all gets put in the pot. So, again, if you have a limited company, no brainer, in my opinion.

Sara [00:35:23]:

Naomi, is there, I came across this a few years ago, obviously, not being expert. But if directors are if there's only 2 directors, or if the directors or the management or the employees all live at the same address, the group private medical insurance policy was not Easy to get or, in that particular circumstance, is impossible to get.

Naomi Smith [00:35:46]:

So private medical insurance goes off the business address, If it's a business private medical insurance, because you could do a business one that goes through the business or you can do a personal one that also can go through the business. So it all depends how it was set up. So for them to leave it at the same address, in my opinion, shouldn't affect That policy.

Sara [00:36:11]:

Okay. Interesting.

Naomi Smith [00:36:13]:

Interesting. You would put the individuals down. It's just their postcode. It's based on and it depends on the type of policy as well. The private medical, you basically have 2 options. You've got what's called consultant select Or you've got countrywide. Consultant select can be called different things with different providers, but what that basically means is that You have access to an array of consultants within a certain radius of where you live, hence, it goes off your postcode. Right.

Naomi Smith [00:36:43]:

Or, countrywide means you have access to any hospital in the country.

Sara [00:36:49]:

So you could still potentially do a group private medical insurance policy through your business even if The directors and employees lived at the same address.

Naomi Smith [00:37:01]:

Yeah. Okay.

Julie [00:37:02]:

I think there's an inquiry coming your way now. My sickness. It's almost

Naomi Smith [00:37:09]:

it's almost like a husband and wife direct a team of a business Mhmm. On private medical insurance. That happens all the time.

Sara [00:37:16]:

Yeah. Okay.

Julie [00:37:18]:

Right. Naomi, That has been the most fantastic whistle stop tour through business protection. I can't believe how much value and knowledge you've packed in to such a situation of time.

Naomi Smith [00:37:30]:

More. I've literally tried to just to, like

Julie [00:37:32]:

I know. So that's what I'll do. So we'll maybe get you back if we want a deep dive on something if that if you'd be willing to join us again.

Naomi Smith [00:37:40]:

I think each one and its own entity, offers so much more. So we've literally, As you said, whistle stop to it around the mall. But, yeah, I hope I've kind of given a bit of clarity for the listeners that, You know, if you if you own your own business, you know, go out there, find an adviser, just get a bit of advice on How can you save your business money with these policies, but more so, how can you protect you and your business financially if something was to go wrong? Because anything could go wrong tomorrow, and you don't want to lose all that blood, sweat, and tears that you put into your business to grow it.

Julie [00:38:18]:

Right. I'm going to go step further Naomi and say, you'll listen to this and you own a business. Don't go and find an adviser. Go and find Naomi.

Naomi Smith [00:38:26]:

Saltire Financial. Find me on social media and my website.

Julie [00:38:31]:

Okay. Because I think what we've demonstrated is that this is an area of expertise. And, you know, I think somebody that lives it day in, day out and knows it inside out is just yeah. Speak to Naomi, people.

Naomi Smith [00:38:45]:

Oh, thanks, David. Yeah.

Julie [00:38:46]:

Right. Naomi, as we wrap up the episode, because I did I did reveal at the start, we're quite nosy. Right? We like to end the episode. Right? Are we no say no. We're curious. We're curious. That's where I've been curious. See me reframe that there.

Julie [00:39:02]:

Oh, never curious. I'm genuinely interested in everybody that comes into the cafe. So we like to ask people a little random question about themselves at the end.

Naomi Smith [00:39:11]:

Okay.

Julie [00:39:12]:

So the question I have for you today is, when you were little, Naomi, what did you want to do when you grew up?

Naomi Smith [00:39:21]:

I find this funny. So you might not find it funny, but I find it funny from what I thought to where I am now. So I was born in Wales, believe it or not. Lived there for my first 5 years, and then I moved up to Berwick upon Tweed and grew up there. All my family are there. So when we lived in Wales, Obviously, with all my family being up north, we didn't really see them a lot. So when we moved, I was 5 and, I started growing a really close relationship with one of my aunties. And my auntie, Worked in a reception of a hospital.

Naomi Smith [00:40:04]:

She was like a hospital receptionist. Anyways, I was like, I want to be a receptionist. This sounds really cool. Like, I want to I want to speak to people. I want to pick up the phone. I want to see patients. I want to see what's wrong with them. I want to, you know, try and diagnose them when I can't.

Naomi Smith [00:40:19]:

You know? Like, that that going to thing. I want to be the doctor, but without being the doctor Because that's what receptionists are at hospitals. Right? My auntie would laugh at that. And, I, Yeah. I wanted to be a receptionist, and I swear I remember going to middle school. We had careers day, so that would have been, I was 11, and I still wanted to be a receptionist. And, I just I just had this yeah. I thought it was a really cool idea to sit at a desk and push paper about? Which is kind of what I do.

Sara [00:40:53]:

All the hardworking receptionists out thing.

Naomi Smith [00:40:56]:

Which is kind of which is kind of it's kind of why. I don't mean it like that because I know it could be very hard. But it's very similar to what I do now. So I do sit at a desk. I do, you know, Deal with admin, deal with paperwork, pick up the phone, have that customer service

Julie [00:41:10]:

And find out what's wrong with everybody.

Naomi Smith [00:41:13]:

I do. I do,

Julie [00:41:14]:

don't I? Because I'm living

Naomi Smith [00:41:16]:

Naomi, you're living the dream. Sense.

Julie [00:41:21]:

I could honestly put my hand on my heart and say that you're the first person I've ever met. They wanted to be a hospital receptionist when they grew up. So thank you So much for sharing that with us. No. Naomi, genuinely, thank you so much for coming on and sharing your knowledge and your wisdom with our listeners. If they want to follow you on social media, what's the best place to find you?

Naomi Smith [00:41:44]:

So I would say Facebook, LinkedIn. Just look for Saltire Financial Limited. You'll on the on the side.

Julie [00:41:49]:

And I will make sure there are links to all of your stuff in the show notes. But, Naomi, thank you very much. Sarah, Michelle, thank you for keeping me company.

Sara [00:41:58]:

You're very welcome. Thank

Julie [00:41:59]:

you, ladies,

Naomi Smith [00:41:59]:

for having me. I really appreciate it. Thank you.

Julie [00:42:01]:

Oh, no. It's been an absolute pleasure. And it sounds like we're going to get you back at some point as well. New listeners, thank you very much for continuing to listen. All that remains for me to say is, do take care of yourselves. Until next time.