The importance of business protection is often overlooked. Essentially it is designed to help business owners plan for the unexpected. It provides cover to ensure the business can continue with minimal disruption following the loss of one of their key employees or business owners through death, critical illness or temporary disablement. Identifying key individuals who are crucial to the success of a business and putting a plan in place to help provide financial stability.
Business protection is available for partnerships (including limited liability partnerships), directors / shareholders of Ltd Companies, sole traders and key employees. It can be used to protect against various events, and how it is set up will depend on the type of business and its needs.
Key Person Protection
Key person protection is where a business insures itself against the financial loss it would suffer if a key member of staff in their business died or suffered a critical illness during the term of the policy. It is effectively a life insurance / critical illness policy taken out to cover the life of the key person.
The policy is owned and paid for by the employer, so any lump sum pay-out is paid directly to the employer. The lump sum could significantly help the business to recover as the proceeds can be used to help replace lost profit, or with hiring a replacement employee.
If a shareholder in your Ltd Company, member of your LLP or partner in your partnership were to die could you afford to purchase their share of the business? If not, then there could be significant implications for the future of the business.
Shareholder protection can help protect the ownership of your business by providing a lump sum to the remaining business owners in the event of a fellow business owner dying or being diagnosed with a terminal illness. The lump sum can be used to purchase the deceased partners / shareholders / members interest in the business.
Relevant Life Plan
A Relevant Life Plan is a term assurance plan available to employers to provide an individual death in service benefit for an employee and can be a tax efficient way to purchase life cover. It’s designed to pay a lump sum if the person covered dies or is diagnosed with a terminal illness, whilst employed during the term. It is paid for by the employer and is aimed at: –
Employers looking to provide ‘death in service’ benefits but with too few employees to set up a group scheme. Directors wishing to provide their own individual ‘death in service’ benefits without taking out a scheme on all employees.
Our Expert Advisors
At Jordan Lynch we’re able to advise on and arrange all forms of Business Protection with all the UK’s leading insurers. Our expert advisors have in depth knowledge of how businesses are structured and can provide bespoke solutions so that your business can protect itself against the unexpected.