What is Business Protection Insurance?
Running a business can be extremely rewarding but also extremely challenging as unforeseen circumstances can cause disruption, or even put a business at risk. No-one can predict the future and business protection is there to act as a safety net to help. Business Protection covers four main areas; company debts, profits, ownership (shares) and family.
Business Protection is more complicated than personal protection. The way you pay for it is usually different and how HMRC taxes the policy, depends on the type of cover and how you set it up so it’s important to seek professional advice.
Business Loan Protection
Did you know that a Director’s Loan must be repaid on death? Could your business afford to repay it’s debts on the death of a director?
The death of a business owner who has guaranteed a loan is particularly serious for a business. Business borrowings may take many different forms ranging from bank loans, overdrafts, personal loans and credit cards.
Business Loan Protection can save a business by helping to pay any outstanding debts and protect the business owner’s wealth. Critical Illness options are also available.
Key Person Protection
Every business is different but each business has staff members who have a direct impact on company profits, creditors, brand and cashflow. A Key Person is an employee whose death or continued absence would negatively impact the profits of a business. They could be the business owner, director, salesperson or any employee with specialist skills or expertise. If your business lost a key person, could they be easily and quickly replaced?
Key Person Protection could help protect the profits of a business by giving breathing space to continue without financial hardship, while another member of staff is trained or a replacement is found. Critical Illness options are also available.
Share Protection
Following the loss of one business owner, many business co-owners believe they would just buy their partner or colleagues share of the business. But what if they couldn’t afford to buy the shares?
Having the correct protection in place can provide funds to purchase the affected individual’s share of the business. This means that remaining business owners can retain full control of a business, while being comfortable that the deceased’s beneficiaries have been treated fairly and equitably. Critical Illness cover options are also available.
Relevant Life and Executive Income Protection
As a Limited Company Director or owner, you can protect your life or your income through your business, if you’re classed as an employee. Relevant Life Plans are tax efficient and can work up to 50% cheaper than standard life or income protection cover, paid for out of net income.
A Relevant Life plan can also be used to provide an individual death in service benefit for your employees. If they die whilst the policy is in place, their loved ones can receive a lump sum.
How Much does Business Protection Cost?
Business Protection is a lot more affordable than you may think. Premiums can often be classed as a business expense and offset against corporation tax. The cost depends largely on the amount of cover required as well as the length of cover and whether you add Critical Illness Insurance. Factors such as the age, medical history, smoker status and lifestyle of an employee being insured, may also affect the premiums
