Business Insurance can seem complicated. Businesses often have loads of insurance products floating around their orbit; liability, indemnity, assets. All very important. But ‘Business Protection’ is slightly different. It’s a class of products which ensures a company can survive if core, important, maybe even irreplaceable people get seriously ill or die. Like other protection products, no-one wants to think about it. But it’s a painfully real possibility.
Why is Business Protection so important?
Statistics tell us that barely over a quarter (28%) of UK businesses established in the last two years have any kind of Business Protection in place.
Given young businesses’ survival often depends on one, two or a handful of key people it’s a bit like playing with fire. More stats tell us that approaching half (46%) of these businesses would have to cease trading if they lost a core person to illness or death.
One aspect of Business Protection that’s often talked about is Key Person Insurance. It protects a business from the potentially catastrophic impact of losing a founder, director or critical talent.
Of course, companies come in all shapes, set-ups and sizes, but it’s not a stretch to say that every one – from the sole trader to the family business to the dotcom start-up – has at least someone they’re dependent on. Lose that person, and recovering the business could prove massively difficult.
Grieving colleagues requiring time off, investment in training and recruitment, stress as you try to cover your lost colleague’s clients, contacts and duties … the knock-on costs can quickly soar. Unpleasant as it sounds, clients, customers and contacts might not empathise with your plight – and any disruption to service could see them go elsewhere. Business Protection cover really can make the difference.
What are some other popular Business Protection products?
Should a business founder, shareholder or partner die or suffer a critical illness, it could threaten the company’s liquidity, cause ownership disputes and/ or leave other investors needing quick cash to secure control. Few think about the implications of this, but it can rock a business to its foundations.
Ownership Protection Insurance is an antidote. It pays out vital funds that allow you to buy (and retain control) of your business in the event of losing a financial influencer to illness or death.
On a related note, Business Loan Protection enables you to pay off any outstanding company loans or debts that would look shaky if a key person died or fell ill. Director’s loans, venture capital loans, commercial loans and mortgages, personal guarantees, overdrafts and credit cards can all be covered.
Employers and business owners can also see Business Protection as a route to offering attractive employee benefits. Relevant Life Cover, for example, is a tax-efficient way to provide death-in-service benefits.
Providing team members with Income Replacement Insurance or Critical Illness Cover is another way to pump up the package you offer current and future team members. It let’s know you value them and, crucially, will look after them should the unforeseen happen.
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About The Author
A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.