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Mortgage Advisor & Director
What is business protection?
Business protection is a type of insurance designed to protect a business from the financial effects of the death, terminal diagnosis or temporary disablement of a critical individual.
Also known as 'Keyman insurance', Business protection helps the company to continue without significant disruption in these scenarios.
How does business protection work?
Business protection can be arranged for partnerships, shareholders, sole traders and key employees. There are various options for this type of insurance, depending on the type of business and scenario.
What types of business protection are there?
There are various types of business protection available, broadly split into two categories:
Key person protection
For limited companies and limited liability partnerships, they can take out a plan on the life of a key person and should they die or suffer a critical illness, the plan benefits can either be paid directly to the company or placed in trust to the remaining shareholders.
Where the key person is a partner in a partnership, they can take out a plan on their own life and enter it into a trust for the benefit of the remaining partners.
Sole traders can arrange business protection for both themselves and a key employee. In the event of the death of the sole trader, the family could then settle any business debts. If an employee who is crucial to the business were to suffer a critical illness or die, the plan benefits would allow the sole trader to navigate the disruption caused.
Ownership protection
In the event of the loss of a key person to the business, ownership protection allows the remaining owners to retain control.
With an individual purchase plan, each owner takes out a protection plan on their own life to the value of their share. These plans are written into trust for the benefits of the other shareholders or partners. If the individual were to die or suffer from a critical illness, the plan benefits then allow the remaining business owners to purchase their shares.
It is also possible for a company to purchase the shares of a deceased or critically ill shareholder, although there are strict rules around this.
Is business protection a good idea?
Business protection can provide a safety net in the event of the loss or severe illness of a critical person to the business.
The cover helps to maintain business continuity and allows the family of the deceased to receive a fair value for their share of the business. Plan benefits can help to repay business loans and manage financial disruption.
Get a quote for business protection
Our team of experienced advisors can help you to get an insurance policy that is perfect for you. By working with an insurance expert, you ensure that your cover is precisely tailored to your needs while remaining cost-effective. Get in touch today to get started!
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Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
