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        Updated: December 14, 2022

        Business Protection Life Insurance Made Simple

        Worried about how to protect your business when the unexpected happens? This guide outlines all the different types of insurance and how they work

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        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in business protection insurance. Ask us a question and we'll get the best expert to help.

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        Richard Angliss

        Author: Richard Angliss - Finance Expert

        Updated: March 04, 2020

        From protecting your company’s shares to insuring the lives of key members of staff, this article explores the ways life insurance can be used for business protection and ensure continuity in the face of adversity…

        Types of business protection life insurance

        There are four types of business protection available:

        • Key person insurance
        • Business loan insurance
        • Shareholder protection
        • Relevant life

        Insurance providers understand that businesses need products to help make protecting their interests easy to arrange and simple to handle, yet the multiple products on offer and the sometimes complicated terminology can muddy the waters.

        So let’s break things down by summarising each product in a simple way we can all understand…

        This can be used to protect your business if you lose a crucial member of your team due to death or critical illness. For example, if you’re an online company reliant on the technology guru who knows how to do magical things with code no-one else in the office understands, you can ensure you have the financial resources to cover their loss to the business.

        The company pays the premiums and owns the insurance policy. In the event of a payout, the money can be used towards finding a suitable replacement and help cushion any short term financial losses the business might incur during a potentially difficult transition.

        According to research by one of the leading insurance providers, 40% of businesses would struggle to keep trading if a key person or company owner died or became critically ill. And yet, more than half of trading companies don’t have any key person insurance in place.

        For more information on how key person insurance works, see our Guide to Key Person Insurance.

        When a company takes out a loan, some lenders will insist that insurance is in place to protect their risk before agreeing to lend the money. In such cases, lenders will want to know that the lives of the key members of a company’s success are insured.

        The business takes out life cover on their crucial team members and, in the event of a claim, the payout will go towards paying off the business debts.

        This can be bought by the company to protect the interests of the main company shareholders. This uses life insurance to ensure that funds are made available to purchase the shares if an owner or shareholder dies. Like key person insurance, it’s also possible to protect against critical illness but you will pay more for the extra level of protection.

        According to research less than 40% of businesses have shareholder protection in place and are putting the interests of the company, and themselves, at risk by failing to have contingency plans in place, should the worst happen.

         

        Although not strictly a product to protect your business, it falls under the same umbrella term because it is often used by business owners to reduce the cost of privately-held life cover. This life insurance is bought and paid for by the company but, in the event of a claim, pays out to the insured employee’s family or beneficiaries.

        Relevant life insurance could save a small business owner money due to the tax advantages it offers. No income tax is payable on premiums as the cover is not treated as a benefit in kind. In addition, premiums for relevant life cover can be declared as a business expense and help reduce your corporation tax bill.

        Read our article on relevant life cover to find out more.

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        What options should I use to protect my business?

        What kind of cover you should put in place to protect your business interests will depend on how your company operates. Areas of vulnerability can vary from business to business.

        If you’re starting from behind the eight ball and currently have no business protection, think about what would happen if you lost a key member of staff or something happened to you or one of your co-owners.

        Weaknesses which might apply to one business won’t necessarily apply to your company needs. Get expert, unbiased advice about how you can protect your business interests by talking to one of the independent financial advisors we work with.

        Speak to an expert

        Call 0808 189 0463 or make an online enquiry for a no-obligation chat. We’ll match you with one of the independent business experts we work with.

        They will talk you through the business protection options most suitable to your business needs and get quotes so you can get a handle on how much the right level of insurance might cost.

        All the advisors we work with are experienced in helping protect businesses and, with access to all the insurers in the UK, know which products will provide the best protection for business continuity when faced with adversity.

        Ask a quick question

        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in business protection insurance. Ask us a question and we'll get the best expert to help.

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        Richard Angliss

        Richard Angliss

        Finance Expert

        About the author

        Richard Angliss has made a career in financial services which stretches over 40 years.

        His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.

        For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.

        At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.

        With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them.  Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.

        He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.

        FCA Disclaimer

        *Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

        Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.