What is it Business Protection?
Business protection is a range of protection insurance policies which can help protect a business from financial losses in the event of key people passing away, being diagnosed with a critical illness or being unable to work due to a disability.
The most valuable asset to any business is their people – the business owners, key employees or key people. Therefore having the correct plans in place to ensure the continued success of the business is vital.
Who is Business Protection available to?
Business protection is available to all types of business structures including partnerships (including limited liability partnerships), shareholders, sole traders and key people. It can also be used to ensure repayments of business debt are covered in the event of a death or a diagnosis of a critical illness of an owner, director, partner, key person or sole trader.
What kinds of Business Protection are there?
Partnership or Shareholder Protection:
This is used to protect the ownership of the business. If a partner or shareholder dies or is diagnosed with a critical illness resulting in them being unable to work, this protection could enable the remaining owners or shareholders to buy the affected individuals share of the business.
Without business protection, the remaining owners could lose control of the business which could impact its continued success.
Loan Protection:
This policy could be used to repay business debt. For example, commercial mortgages, director’s loans, overdrafts, trade creditors etc. If the business loses a key person, for example a director with a loan, the money paid out by the policy can be used to clear this loan or any other outstanding debts.
Without business protection, investors and banks may call in their debts due to the circumstances as they may feel less confident in the business’s ability to keep up with payments.
Key Person Protection:
If a business loses a key person who largely impacts revenue for the business for example, a Chief Executive Officer, the policy could give the company a cash injection. This allows the company a bit of breathing space to either replace lost profits or possibly recruit a replacement to ensure continued success for the business.
Relevant Life Cover:
Relevant life insurance is a type of policy which provides a business with life insurance for an individual employee. This is an alternative way to provide death-in-service benefits for employees outside of a registered group scheme, while potentially providing tax efficiencies.
What could Business Protection cover?
- Loss of profits
- Loss of important business contacts
- Cost of recruiting and training replacement
- Covering existing loan repayments
- Loss of vital systems and processes knowledge
When do I need Business Protection?
It’s simple, every business needs it from the moment they are created.
When business owners think about protecting their company, they begin to think about their assets such as equipment, vehicles, premises and stock. While many business will insure their assets, they forget to insure what is really most valuable – the people.
In any business, regardless of the size, there are at least one to two people the business could not function without – protect them and protect yourselves!
Where can I get Business Protection?
Just Mortgages has a number of experienced, licensed Business Protection Advisers who can assist you in your financial planning. Please contact one of our advisers or email info@justmortgages.co.uk to find out more on how you can ensure your business, and its future are protected.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.