Business Protection Insurance provides a financial safety net for your company if a key individual, shareholder or partner dies. The cash lump sum payout is designed to keep your business afloat during such difficult times. Add Critical Illness Cover to pay out if a key individual suffers a serious illness such as cancer, heart attack or stroke.
There are three main types of cover:
When business owners think about protecting their company, they firstly think of assets such as vehicles, premises and stock.
While nearly everyone insures these, many forget about what’s most valuable — the people behind the business. No matter the size of your company, there’s usually at least one or two key people the business simply couldn’t do without.
Key people might include:
Whatever the individual’s role, losing them can cost more than just recruiting and training fees. Business Protection can help make up for:
It can also provide the funds to:
Legal & General found that 52% of businesses would fold within a year if they lost a key person. Yet despite this, half of companies don’t have any kind of business protection.
The research also found that:
Using ONS Mortality Data the table below represents the risk of a male at various ages dying in the next 10 years.
Risk of Death in 10 Years
35 Years Old
1 in 62
45 Years Old
1 in 29
55 Years Old
1 in 12
Use our Life Expectancy Calculator to work out your own personal risk of death over a given period 😵
Around 80% of all Critical Illness claims are made up of the ‘big three’ illnesses — cancer, heart attacks and strokes.
IMPORTANT NOTICE 🧐
Not every case of these illnesses will be covered by Critical Illness Cover. Less severe incidences may not be included in your policy wording or may only trigger a partial payout, so it’s important to check definitions carefully.
This could be anyone from a business owner to key management figures. It offers a payout to help provide business continuity in the event that the key employee dies or is diagnosed with a critical illness.
When a shareholder dies, their shares usually become part of their estate. These shares are then typically transferred to a family member.
This can cause problems for a business.
To retain control of the business, the remaining shareholders must raise funds to buy back the absent shareholder’s shares.
It’s here Shareholder Protection steps in by providing the funds to buy back the shares of a shareholder who suffers a terminal illness, dies or is diagnosed with a critical illness.
If you have corporate debt it’s worth considering Business Loan Protection in case someone responsible for repaying it dies or becomes critically ill.
An uninsured business loan runs the risk of your company being declared insolvent after your death if it can’t repay the loan. That’s why lenders and investors such as venture capital firms often expect a business to arrange this cover.
In the event of the death or critical illness of a person responsible for repaying the debt, the policy pays out so you can repay the loan.
Please be aware these business insurance policies are designed for limited companies and partnerships, they are not designed for sole traders.
The cost depends largely on the amount of cover you need, as well as:
There are other factors which impact the cost of cover which you have less control over, such as:
To calculate the potential cost you can get instant online quotes from Aviva, Vitality and other top UK insurers here →
Your company pays for Relevant Life Insurance, which protects your life as a director / employee by paying a cash lump sum to your family should you pass away.
Given the fact that your company pays for the policy, it’s incredibly tax-efficient. The result is a Life Insurance policy that’s almost 50% cheaper than paying for cover personally.
Directors and business owners don’t tend to get sick pay.
As such, you may want to consider Income Protection for Company Directors. If you become too ill to work, it pays a monthly income equal to a percentage of your gross pre-illness drawings into the business.
You then distribute these funds from the business in a tax-efficient manner in consultation with your accountant to make up for your lost income.
When it comes to Business Insurance, it pays to shop around. Below are some of the top insurers in the market you may want to consider:
The core benefit of any insurance policy is that it provides protection should the worst happen. However, many insurers now include a number of additional benefits with their policies which you can use in your everyday life. Some of the most popular benefits include:
Business Protection Insurance is more complicated than personal cover. For example, the way you pay for it is usually different. Also, how HMRC taxes the policy will vary depending on the type of cover and how you set it up.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.
We are a team of regulated financial advisers, if you need help give us a call on 02074425880 or email firstname.lastname@example.org.
The staff have been very knowledgeable and I have enjoyed working with Nadeem on setting up our plan.