A Concise Guide to Business Protection Insurance

What are the insurance options for business protection? Discover all the ways business protection insurance can help protect your business interests
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Introduction to business protection insurance

Business protection insurance is a catch-all name for the ways you can insure your business against the loss of a key employee or a business owner due to death, long-term serious illness or disablement.

It is sold by UK insurance providers to ensure business continuity and succession planning, something overlooked by many business owners, particularly when the company is small.

This guide explains the options available under the business protection insurance umbrella to help you get a clearer understanding of the kind of cover you might want to consider getting sorted to protect your business and key employees.

Read on for all the info or click a link to jump ahead:

What is business protection insurance?

Business protection is a range of insurance policies which can help protect businesses from financial losses in the event of key people – business owners or key employees – dying, being diagnosed with a critical illness or being unable to work due to disablement.

The insurance can be taken out to protect partnerships, shareholders, sole traders and key employees, although how the insurance is set up will depend on your specific business needs.

A business protection insurance policy can be set up to insure more than one life. In most circumstances, in the event of a claim being made, the cash lump sum would be paid out to the business or remaining owners of a business.

There are four types of business protection insurance you can get:

  1. Business loan insurance
  2. Key person insurance
  3. Shareholder protection insurance
  4. Relevant life insurance

Product type definitions

The table below provides simple at-a-glance definitions for the four main types of insurance which fall under the business protection umbrella:

Type of Insurance Definition Protects Benefits
Business Loan Cover Life insurance, bought by businesses to help repay business debts if the owner dies. Critical illness is an optional extra The person guaranteeing the debt, often the business owner may also be a partner or business director The business; payout goes towards repaying business debts at a difficult time
Key Person Cover Life insurance bought by businesses to help provide funds to replace staff and cover any lost income streams during a tricky transition phase, Critical illness is an optional extra Any key employee; for example, a business owner or director, your CEO, finance director, top sales person or head of technology The business; funds can be used to recruit a suitable replacement or replace lost profits
Shareholder Protection Cover Life insurance bought by businesses to ensure available funds to purchase shares if an owner or shareholder dies. Critical illness is an optional extra Business Owners Proceeds paid to remaining owners to fund the buying of shares from the deceased’s estate for a fair value and retain control of the business
Relevant Life Cover Individual life insurance which company directors or owners can buy for themselves (if they are paid through PAYE) or their employees Small business employees The family of the protected employee

If you know you need to get some protection in place for your business but aren’t quite sure where you should start, get in touch to speak to one of the independent financial advisors we work with. They will be able to discuss your circumstances and help you identify the areas where you may be most vulnerable.

With access to all the insurance providers in the UK, they will save you time, hassle and money. And ensure you set up the right insurance for the most competitive price available.

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Talking to a professional independent financial adviser could help you make the right decisions about the ways you could help protect your business or attract new talent to your organisation.

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