Protection plans for entrepreneurs

Whilst businesses are generally quick to insure themselves against the most commonly encountered operational risks, it’s often the case that owners, directors and shareholders can overlook the need to protect what’s arguably their biggest and most precious asset – themselves, their management team and their workforce.

In today’s fast-paced business environment, it can be hard to find management time to think about those ‘what if’ scenarios that can happen to any business at any stage of its development. However, research has shown that more than half of all UK small and medium-sized enterprises would close within a year if a key employee were to die or become critically ill1.

Planning for the unexpected

An analysis of your business protection requirements is an important first step in highlighting the risks you run and will enable your adviser to recommend the right solutions. These will vary from business to business, but could include:

  • Key person insurance – insurance that pays a lump sum if someone integral to the business dies or is diagnosed with a serious illness.
  • Relevant life plans – a term assurance plan that provides death-in-service benefits for employees with the premiums paid for by the employer. Employers can choose the level of cover and the length of the policy term they require to suit their specific business needs.
  • Shareholder protection policies – these provide vital finance in the event of the death of a shareholder or partner in the business, removing the need for the remaining shareholders to rush to find the funds to buy out the deceased’s shares.

If you could use some advice on securing the future of your business, do get in touch.

1 Legal & General, 2017

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Business succession planning

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