Business Protection

Being prepared

Small businesses form the backbone of the UK economy, with small and medium-sized enterprises (SMEs) thriving in almost every sector of business, be it retail, construction, financial services, IT or health. They vary considerably in size, some having as many as 250 employees, others as few as one. Running an SME can be hugely rewarding, both personally and financially, but it’s a big responsibility and it isn’t without risk. Whether you’ve been in charge of a successful business for several years, or have only recently started up your own enterprise, it’s important to understand the challenges and potential pitfalls, and to think of ways of minimizing their impact

You can insure your premises, your IT equipment, your stock, any specialist machinery and so on. Most business owners are aware of this and seek appropriate cover. However, these same companies are far less likely to insure the health, or the lives, of the key individuals who keep the operation running. Even when a firm has a business disruption plan to ensure trade continuing in the event of flood, fire or computer failure, it won’t necessarily have a similar plan to assess the impact of losing key staff through death or illness.

For example, if your business partner suddenly died, would the business have to find the money to pay back loans he, or she, had underwritten? Or if you became critically ill, would there be the funds to pay a replacement to ensure the business is still performing when you recover? The sad truth is that such an event could prove catastrophic. Insurance can help lessen the financial impact of such events in a number of ways. These include:

› The repayment of business debts

› Provision of funds to help find and recruit specialist staff

› Purchasing of shares from a deceased business partner or director’s estate

Business Loan Protection A type of life insurance, bought by businesses. It will help pay off business debts if the owner dies. Critical illness cover option also available. Anyone who has guaranteed these debts – usually the owner, but can be a partner or director of the business. The business. Debts are repaid at a difficult time.
Key Person Protection A type of life insurance bought by businesses. Payout provides funds to help find replacement staff, and cover lost profit streams. Critical illness cover option also available. Any key member of staff. It could be a chief executive, finance director, salesmen, director or owner. The business. Funds available to help find suitable replacement or replace lost profits.
Share Protection A type of life insurance bought by businesses, which ensures there are funds to help purchase shares if an owner/ shareholder dies. Critical illness cover option available. Owners of the business. The proceeds are paid to the remaining owners so that they can buy the shares for a fair value from the estate and thus retain control of the business.
Relevant Life Plans An individual life insurance policy that company directors and owners can buy through their business, if they are classed as an employee. Employees of a small business. The family of the director or employee that it was taken out for.