Companies readily take out insurance on their physical assets such as business premises, plant and machinery, computer equipment and vehicles. They do this so they can afford to replace those assets should something happen to them, and this ultimately helps minimise any business disruption that could lead to a loss of profits.
However, business owners often overlook a significant, if not the most significant, factor in the success of their business, which is their employees. Most companies will know which employees are vital to its success so should consider the financial impact if one of these key people were to die or become critically ill.
What is business protection?
As the name implies, it’s a way of protecting your businesses if something goes wrong. There are six elements to business protection that should be considered:
- Key Person Insurance
- Director/Shareholder Protection
- Partnership Protection
- Income Protection
- Business Loan Protection
- Relevant Life Insurance
Why is it necessary?
Business protection is all about insuring and planning for the unexpected. With a business protection arrangement in place, you can:
- Keep your business trading
- Protect corporate profits
- Protect corporate debt or the repayment of a director’s loan account
- Ensure you continue to receive an income if you are unable to work due to long term illness, sickness or disability
- Replace key individuals in the unfortunate event of death
- Buy out a shareholder if they become critically ill or a shareholder’s estate if they die
Every business is different so the business protection solution you choose has to have the flexibility to answer the individual business needs and has to consider:
- Being able to change benefits as business needs change
- Ensuring the policies are structured in the correct way with any appropriate trusts in place
- The tax implications for the payment of premiums and the proceeds of any claim
Legal and General research found that 89% of businesses who have business protection took it out because they were advised to do so by a financial professional, not because of personal awareness, which shows that more awareness is needed around the importance of having a policy set up.
With the right knowledge, businesses are better placed to make the right decisions in protecting themselves against unexpected events. At Cameron Chase we are happy to share our knowledge and expertise on business protection with you. For a free no obligation meeting call 0161 723 2299.
 Legal and General- State of The Nation’s SMEs research campaign 2016.