Is business protection insurance right for me?

Monday, 20th March, 2017
insurance

I came across an interesting quote, by an unnamed author, whilst preparing this article. It reads: –

“You don’t buy life insurance because you are going to die, but because those you love are going to live.”

Whilst the purpose of this article is, arguably, more practicality driven as opposed to sentimentally driven, which the quote would imply, the types of business life insurance it covers are hugely important and often overlooked. And that’s why I’ve decided to place them in the spotlight.

As you might expect, there are many different aspects to business insurance (and insurance in general), however for the purposes of this article I’m going to focus on the following three areas of business protection: –

  • Partner/Director/LLP share protection
  • Key person protection insurance
  • Relevant life plans

Partner/Director/LLP share protection

Are you a director, partner or LLP in a firm? If so, have you considered the impact that the sudden passing of a fellow owner could have on you and the remaining owners?

Having to deal with losing a critical member of the business is hard enough – but what happens if that person’s share of the business falls into the hands of someone who doesn’t share the same commitment and vision required to continue driving the business forwards?

Through this type of insurance, a successful claim would see the policy pay out a sum of money to enable the remaining owners to purchase the deceased’s interest in the business.

The day-to-day management of a business is undoubtedly challenging enough, however it might be worth taking time out to consider this option in order to safeguard your business and ensure its longevity.

Key person protection insurance

This is another insurance for business owners – particularly those who are dependent on one particular member of the team, such as the sales director or managing director.

If the sudden loss of that key person has the potential to directly impact the business by reducing sales and profit – or even indirectly through wasted time and costs attributable to recruitment, then this is likely to be of interest.

Key person protection is essentially life assurance or life assurance and critical illness cover attributed to one key person, but an insurance policy that’s owned by the employer. In the event of a pay out, it’s the employer that receives it and not the person affected.

This applies to limited companies and limited liability partnerships. In the case of a partnership, the key person protection policy is written on an own life basis and may be placed in trust for the benefit of the other partners.

Relevant life insurance plan

A relevant life plan is a term assurance plan that enables employers to provide their employees with an individual death in service benefit – in a very tax efficient manner.

If the employee dies whilst employed during the length of the policy, it will pay out. Likewise, it will also pay out if the employee is diagnosed with a terminal illness. This is a nice benefit to offer staff and one that adds value to an employee’s overall remuneration package. It’s also a tax efficient way in which directors of limited companies can provide life cover that protects their families should they (the business owner) die.

This is very much a ‘crash course’ in the different types of business protection insurance however it should provide an indication of what’s available to you and how it works.

If you would like more in-depth information then contact a member of Complete Cover – a highly experienced team of Guildford insurance brokers – who will be able to talk you through all of the business insurance options available. Simply call us on 01483 238280 or email info@complete-mortgages.co.uk.

By Carolyne Fairfull, Insurance Specialist at Complete Cover


Protection insurance – do you know what you’re getting?

Tuesday, 11th February, 2014

Signing an insurance policy doesn’t mean that you can put it in a lever-arch file at the back of a cupboard and forget about it.

Whether you have critical illness cover, life cover, property insurance or a general health insurance plan, the advice that we’re giving our existing and prospective clients is review your insurance policy regularly – at least every six months – or risk owning a policy that isn’t worth the paper it’s printed on.

As an insurance and mortgage brokerage, we’re often astounded by the laid back approach of the public when it comes to protection insurance. Indeed, a recent insurer’s poll of UK protection purchasers revealed that people aren’t taking variable ‘life factors’ into account when it comes to their own insurance policies.

For example, changes in mortgage status such as taking on a larger mortgage or remortgaging, marriage (or divorce) and even having a baby all have implications when it comes to insurance cover.

Imagine taking out life insurance policy in 2014 where the policy stipulates that in the even of your death, your partner will receive the full amount of your mortgage liability, which, for example, is £250,000. In 2016, you purchase a property that increases your mortgage liability to £350,000 however you don’t review and renew your insurance policy. Immediately you are running the risk of your partner missing out on £100,000 in the event of your death.

A sombre thought. Of course, this also applies to less serious and non-fatal events, too. Equally, are you paying too much for your insurance since downsizing your property? You really are missing a trick if you’re not fully aware of what your policy covers you for.

So, what can you do to make sure that your policy covers you at any given life stage?

Simply go and get professional financial advice from an insurance broker who can source a policy that works for you and commit to regularly reviewing your policy in tandem with your current situation.

If you have concerns about your existing protection insurance policy, would like insurance quotes or would just like to find the best policy for you, get in touch with us on 01483 233014 or email our insurance specialist carolyne@complete-mortgages.co.uk.