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BUSINESS PROTECTION
BUSINESS PROTECTION
Protecting
your business against the loss of its most valuable asset, its
people.
Most business owners have not fully considered one of the main risks, nor the associated costs, to their company – the death of a co-owner or a key member of staff or their long-term absence due to serious illness or injury. Business protection policies could make the difference between a business collapsing or continuing to trade should the worst happen.
RISKS
There are four main risks that businesses should consider:
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Ownership
ButtonShareholder Protection – the loss of a co-owner of a business can leave the surviving shareholders with the financial burden of having to raise finances to buy the shares from the deceased’s estate.
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Profit
ButtonKey Person Cover – the loss of a key member of staff or director can represent a significant cost to a business - be it lost profit or the cost of recruiting and training a replacement. Key Person cover provides a lump sum benefit to off-set these costs.
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Debt
ButtonLoan Protection – the burden of debt, be it loans, Director Loan Accounts, loan notes, corporate finance or mortgages can be made even more challenging if a key person is lost from the business.
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KEY PERSON INSURANCE
Protecting the profits of your business
Would your business be at risk if you or a key member of your team was unable to work due to serious illness?
In recent research* 53% of businesses stated they would cease trading within one year if they lost a key member of staff to illness, injury or death (this increased to 67% for new businesses). 73% of sole traders would cease to trade immediately.
In most businesses, particularly smaller ones, the real value is in the people that run it. Although business owners will insure the buildings, stock and vehicles they will often leave their most valuable assets unprotected – the loss of a key member of staff.
Key Person Insurance provides the business with a cash lump sum if the individual covered is diagnosed with a critical illness or serious injury. This can be used to bring in replacement staff or simply provide the cash flow that their loss has cost you - it's up to you.
*Legal and General 2017
LOAN PROTECTION
Protecting your business from debt
In whichever form it takes debts can be significantly more difficult to pay should a key person in the business die or become critically ill.
The added burden of managing without the key person whilst still having significant debts to service can also be a death knoll for the business.
Loan protection will provide the necessary finance required to clear your debts.
It can also be used by the lender or investor to protect their money and may often be a requirement of the transaction.
Loan Protection can be used to protect any kind of company debt that could be challenging to pay should you lose a key person in the business. These include:
Bank Loans - Corporate Finance - Private Equity and Venture Capitalism - Business Mortgages - Director Loan Accounts - Loan Notes
RELEVANT LIFE COVER
Protecting your family for less
According to recent research* only 30% of owners and managers of Limited Companies have heard of Relevant Life Insurance - a personal life insurance policy that can be treated as an allowable business expense, making it a much more tax efficient and cost effective way of providing you with the cover you need to protect your family.
*Legal and General 2017
Relevant life cover is a tax efficient personal life insurance paid for by the business. This can be taken out for any employee within the business, including salaried directors, much like a group death in service policy, but on an individual basis.
The policy can be used to personally protect loved ones and will not count towards the individual’s pension lifetime allowance
If you're an employer looking to provide a life benefit for a member of staff or if you want to have your own life insurance in a tax-efficient manner and without affecting your Pension Lifetime allowance then a Relevant Life Plan could be the product for you.