Business survival planning
If something happened to you, your co-owners or employees, could your business survive?
A study by Legal and General shows:
- 40% of businesses would fold within 12 months after the death or critical illness of a key person
- 46% of new SMEs would fold immediately after the death or critical illness of a key person
The loss of a key person within a small or medium-sized business can cause unexpected costs at what would be a difficult time. Not only would the business have to fund the cost of recruiting and training a replacement, but it would also risk suffering:
- Loss of profits
- Loss of important business contacts
- Loss of knowledge/expertise
The role of business protection
Business protection insurance can help mitigate or prevent these risks altogether. As a business owner, you should know there are three main types of business protection:
- Key Person Insurance – provides a lump sum on the death of an important member of the business
- Shareholder Protection Insurance – provides a lump sum that will allow remaining shareholders to buy the shares of a deceased shareholder
- Business Loan Protection – provides a lump sum to help a business pay any outstanding business loans
There is also the option of relevant life insurance, placed in trust. Although this is not technically business protection, an agreement can be made which specifies the terms on which proceeds can be used.
Critical illness cover should also be a consideration. Research from MetLife in 2012 showed 21% of people have suffered long-term ill health for more than four weeks at some point in their working life.
Protect your biggest asset
People are the biggest asset to any business. Business Protection Insurance can help to keep your business trading should the worst happen.
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