Why business protection is so important
Most small to medium sized businesses rely on a handful of key decision makers to maintain and grow profits – their knowledge about the company and the industry it operates in can easily be under-estimated, especially as their dedication and drive becomes the norm over the years.
The intrinsic value of these people should not be ignored, so what would happen to the business if the worst were to happen? Could it survive one of them being diagnosed with a critical illness, or even dying? Life (just like business) can be unpredictable and the better protected you are, the better chance the business will have of surviving.
Maybe you’re the catalyst for your business? Planning now for eventualities like these can save a lot of time, trouble and effort in the future.
What is business protection?
Quite simply, it’s an insurance contract that helps protect the business should the worst happen. As well as protecting key people, you can also protect key financial commitments that the business has made. For example, this could be protection to ensure a loan is repaid on the death or critical illness of the named person(s), meaning your creditors will be recompensed.
Main types of business protection
• Shareholder protection – this means the owners of the business will be paid a cash sum to buy the share of a co-owner who becomes critically ill or dies. This is a good option for those who want to ensure the business continues in the direction that they want it to.
• Key person protection – this protects against a potential loss of profits that could have an adverse effect on the operation of the business. This could also help pay for utility bills and running expenses.
• Loan protection – This enables the business to make sure any outstanding loans can be paid to those it owes money to should a key member be diagnosed with a critical illness, or die suddenly. The ability to settle debts can have a positive effect on any future borrowing and expansion of the business.
We can never predict what is around the corner and we all hope that these kinds of scenarios will never apply to us; however, it could be prudent to explore these avenues to make sure you protect the business you’ve worked so hard to build up.
If you would like advice or further information, please contact Clayton Holmes Naisbitt Financial Consultancy LLP on 0113 3878240 and we will be delighted to assist you.