Updated: February 26, 2020

Business Income Protection Insurance

Looking to protect your business if a key employee suffers a long-term illness? Read on to find out how to do this

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Richard Angliss

Author: Richard Angliss - Finance Expert

Updated: February 26, 2020

Could your business survive if an unexpected crisis hit? If one of your key players has to take significant time out due to a critical illness, do you have the financial buffer needed to overcome the drop in funds?

It’s not uncommon for small businesses to be brought to their knees if they face unexpected business disruption, but when difficulty strikes, having business income protection insurance is often the difference between make or break. It can pay to be smart about protecting your personal finances.

What is income protection insurance for business?

Income protection provides regular tax free income if you are unable to work for a prolonged period due to an accident or illness. You’ll usually receive monthly payments of up to 60% of your earnings.

Income protection insurance for businesses covers you against losses to your income from business disruption. If you experience unexpected illness or a crisis which leaves you unable to work, having income protection can help you to quickly recover and continue trading.

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How does small business income protection work?

Small business income protection provides you or your employees with regular monthly payments to make up for any temporary loss of income if you’re unable to work.

Exact terms will vary from one provider to the next, but many insurers offer cover against a wide range of illnesses including the flu, musculoskeletal disorders, accidents, or stress.

You pay a monthly premium for small business income protection and receive a regular monthly payout if an illness or injury leaves you out of action.

A financial advisor can help you assess how much income you would need if you were unable to work and then take you directly to a provider who offers cover for your occupation and the range of illnesses or accidents you want to be insured against.

Income cover for small business owners

For small business owners, the stakes are high – if you’re unable to work for a while, the business could take a sudden downturn or even face closure if you don’t have a large emergency fund. But you can protect your livelihood from a fluctuating personal finance cash flow.

Business income protection can ensure you are covered as much as possible in this scenario. It will provide you with a steady flow of a percentage of your regular income while you recover.

Payouts are generally between 60-75% of your income, but you can negotiate the exact terms of your cover based on your specific needs. And under current tax laws, your premiums will usually qualify as a business expense.

A financial advisor can help you navigate the details of taking out income protection such as how much cover you’ll need, how long it would pay out for, the length of your deferred period, and how to claim premiums back from your tax.

How do I get an income insurance quote?

With a quick online search you can find and compare business income protection quotes from multiple providers. By visiting providers websites, you can dig deeper into the specific terms and conditions to find out which insurer could best cover your income protection needs.

However, this process can be tedious and time-consuming, as many major banks don’t offer business insurance or only offer it through a financial advisor.

That’s why many business owners prefer to work with an expert financial advisor who can ensure you’re making an informed, well-researched decision while speeding up the decision making process.

If you claim business insurance properly through your business with the help of a financial advisor, you can take the cost back out of your taxes as an expense.

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Knowing that you and your family are well protected in case of an emergency leading to a drop in personal income will give you the peace of mind to fully focus on running your business.

But many banks and insurers only offer business insurance through a financial advisor, so to find your best income business insurance deal, speak to an advisor who has contacts throughout the entire market and can take you directly to your best offer.

An expert will also ensure the cover you’re taking out is exactly what you and your business needs while maximising your tax advantages.

Online Money Advisor works with the best insurance experts who have contacts throughout the insurance industry.

Make an enquiry with us or call 0808 189 0463 to be connected – free of charge – to a business income insurance advisor for a no-obligation chat.

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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

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.

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