Business Protection Explained

Business Protection Explained

12 May 2019

When many of us think about Business Insurance, we might think of all the various products designed to protect a company against certain losses: Employers’ Liability, Public Liability, Professional Indemnity Insurance… these are all examples of cover that your firm might have, or be looking to take out.

The term ‘Business Protection’, though, tends to refer to a different category of products, designed to help to keep a business afloat in the event of death or illness. 

Why is Business Protection so important?

Statistics indicate that only 28% of UK businesses established in the last two years – that’s less than a third of them – have any kind of Business Protection in place. That’s pretty shocking, given that almost half (46%) of these businesses would have to cease trading immediately if a key person was lost to illness or passed away. Even losing just one person could be disastrous for a company.

One type of insurance that is mentioned especially frequently in discussions about Business Protection is Key Person Insurance. This doesn’t refer to the person who has the keys to the office (so no need to wrestle them off whoever always has them). This policy is instead about protecting a business from the potentially catastrophic impact of losing one of its important directors or employees. There will be someone in every company who the business is seriously dependent on. - someone who is so responsible for the business’s profitability and success to date that it would make recovering very difficult for the company if anything was to happen to them. 

There’s many ways that losing a key person can impact a business financially. Money may well have to be ploughed into recruiting and training a replacement, and even in the meantime, the stress of other personnel having to take on this person’s responsibilities could cause several more of your employees to leave. Vital clients, contracts, sales and confidence in your company might also be lost. 

All these possible consequences arising from the loss of just one person should tell you something about how crucial Key Person Insurance and other forms of Business Protection cover really are.

What are some of the other popular Business Protection products? 

The people and financial aspects of the running of your business do, of course, go hand in hand. If you are a business partner or shareholding company director for instance, you may be mindful that your control over the business could be at risk if one of your partners or shareholders were to die or be diagnosed with a terminal or critical illness. With Ownership Protection Insurance, you’d save yourself the financial worries as this product would provide the funds to enable you to buy the necessary interest to retain control.

Or what about Relevant Life Cover? This is a product that any employee of a business is qualified for. It’s a tax-efficient solution for giving your employees death-in-service benefits and it’s an attractive prospect for future and existing staff.

On the subject of employee benefits, you could let them know how much you value them by giving the the peace of mind of Income Replacement Insurance or Critical Illness Cover. Workers may have taken these policies out individually but often it’s something that an employer offers as a benefit.

Then there’s Business Loan Protection. If your firm has any outstanding loans that it would struggle to pay off in the event of a shareholder, partner or key person falling ill or passing away, you can probably appreciate why. Director’s loans, venture capital loans, commercial loans and mortgages, personal guarantees, overdrafts and credit cards can all be covered by this

Talk to the LifeSearch team today to receive the most informed advice

Do you have any other questions about Business Protection that we haven’t answered here? If so, the LifeSearch team is always available on the other end of the phone to guide you through everything you need to know, as well as to provide a competitive quote. Call 0800 316 7253 to get talking to one of our experts. 

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