If you are responsible for running your own business or a director of a company in a senior position, you will want to make sure your business is protected against a number of key risks.
This video explores some of those risks and how you can put in place effective plans to deal with them.
The background to all of this is no-one has a crystal ball and we cannot know what lies in the future. The question for owners and directors in business has to be “what happens if?”
For example, what happens if you become seriously ill? Or one of your key team becomes seriously ill?
Or, worse still, if someone dies?
What will happen to the Business, how will it be affected?
Most of us will be used to taking out insurance in other walks of life. We must have car insurance by law. If we have a house, we will almost certainly have house insurance. Most people who travel have travel insurance.
But very few businesses have business protection, which are insurances to cover serious risks to the people in the business. Yet, owners, directors and employees of businesses do get ill and some, unfortunately, do die whilst in the business.
The impact of either can be devastating and can threaten the viability of the business. It can ruin your life’s work.
This is something that can be risk-managed in advance.
The answer lies in having structured Business Protection.
This describes the various insurance plans you can take out which will counter the risks.
Business Loan Protection
A starting point is to look at the debts and borrowings of your business. These can be insured by taking out Business Loan Protection. If you have a home mortgage on your house, you will probably have life assurance alongside.
Business Loan Protection is a similar concept, the Business pays a premium to have insurance which pays off any loans, should the owner become critically ill or die. It can also be used to cover any director’s guarantees. Many loans will be subject to such a personal guarantee.
Whether you include critical illness cover or not will be down to individual circumstances, but you should always consider this option.
If you have a Business with more than one shareholder, or in the case of a partnership, more than one partner, then you will want to look at Shareholder Protection Plans or Partnership Protection Plans.
These plans work to get money into the business or into the hands of the other shareholders (or partners) in the event of the loss of one of the parties.
This is a particularly important insurance as it may protect the value of the shareholder or partnership share, as well as the family of the individual.
Key Person Protection
Key Person Protection is insurance which provides cover should a key person be lost to the business.
In the modern economy people are commonly the biggest asset, whereas one hundred years ago it was machinery.
Research shows how big an impact losing a key individual can be, with businesses under serious threat of even being able to continue if this occurs.
The insurance, which again could be life assurance and critical illness cover, is taken out by the Business on any person who is considered to be valuable to the point where the loss would cause financial difficulties.
In this event the insurance would pay-out should one of them die or suffer a critical illness and the business would receive a financial lump sum in compensation.
Business Protection extends to cover other factors and aspects.
This includes Private Medical Insurance, which can be arranged through the business to pay for team members facing medical costs or needing private healthcare. This could be important to get someone back to work quicker than otherwise might be the case.
Income Protection Plans are another option, these are different to critical illness plans, as they insure someone’s income against being off work for a lengthy period for a variety of reasons, for example with back problems.
And finally, if you are in business on your own account and run a company you may be able to arrange your life insurance through a Relevant Life Policy. This is where the Company pays the cost of the Insurance, but the pay-out goes directly to the individual or the family of the individual.
Switching the cost or the expense of the life cover from the individual to the Company can create a significant overall tax saving. Anyone who currently pays for their own life insurance from their own bank account and has a limited company should be aware of this and investigate this further.
You will gather by now that Business Protection covers many risks, to the business, its owners and those who work within it.
In every case it is possible to manage those risks. The way to do this will be down to circumstances and solutions can vary from situation to situation.
This really is an area where getting expert help and advice can make a big difference. We have the expertise and are here to help you find the right solutions for you and your business.