Business Protection, Key Person Insurance & Relevant Life Insurance

Would your business be able to survive without you or one of your key employees?

Your company’s vehicles, machinery, computers and premises may already be insured, but what would you do if a key member of your business dies or is diagnosed with a critical illness and can’t work?

Research from a leading insurer has revealed that over 60% of business owners believe that the death or critical illness of an owner or key employee would have the greatest impact on their business. One in four said that their business wouldn’t survive for more than a year if a key employee suffered a critical illness or died.

Despite this, many thousands of businesses have no cover in place. And, with an estimated £1.35 trillion protection shortfall in the UK, there are lots of companies out there who would benefit from ensuring that their business was protected.

We’re business insurance experts and we can help you find the right policy at the right price. Keep reading to find out more about the types of business insurance available and why you should consider reviewing your protection arrangements now.

The risks to your business

Research has found that almost two thirds of businesses carry some form of debt with the average SME owing nearly £350,000 at any one time. However, despite this, a third of SMEs in the UK have no insurance cover at all for their debts.

And, these debts can often be risky. 23% of SMEs now admit to using credit cards while SME debts of over £50,000 in Directors Loan Accounts have increased from 20% to 33% since 2011. While leaving bonuses, dividends or salary in the business can be a huge benefit to your company’s finances, director’s loans are repayable to the estate if the director dies.

And it’s not just debts that businesses have to face. Many small companies employ key individuals with specific and important roles. In the event of illness or death to a key employee, it is highly likely that many businesses would struggle to meet their obligations.

The loss of a key person could result in:

  • Loss of knowledge to your business and its processes
  • Loss of profits or income
  • Problems in meeting loan repayments
  • Loss of important business contacts or goodwill
  • Loss of contracts

Business protection or Relevant life insurance can give you peace of mind

Business protection can help your business continue to trade if you were to lose an owner or employee who is important to your business. It can help you to replace key individuals, repay debts or provide funds provided to purchase shares from the deceased owner’s estate, giving you added peace of mind that your business could live on.

Key people can include business owners, senior directors, sales people, production managers and research and development staff. And, while many business owners agree that the loss of a key person can have dire consequences for their business, the majority do not have any protection in place.

Business protection is generally known under two different terms:

  • Key Person Protection – formally known as key man insurance, this lets you insure your key people for life and/or critical illness cover. It makes sure that your business is compensated with an insurance payout if your key people die or suffer a critical illness, giving you the cash injection you need to ensure your company can continue
  • Relevant Life Insurance – this provides your business OR any named beneficiary with a lump sum in the event of the death/critical illness of a Director, or other employee of a Ltd company. It can help you to pay off outstanding loans (such as bank loans, credit cards or director loan accounts) if something happens to a guarantor.

As well as a financial payout, many insurers also offer practical help to your business as part of your protection package. A good insurer will generally also offer medical, career and legal helplines as well as support in recruiting temporary or permanent help.

Furthermore, in many cases the premiums that you pay to a business protection policy are viewed as an allowable business expense by HRMC. This means that your premiums could qualify for full income tax relief, national insurance relief and corporation tax relief.


Ensure your business is protected today

While you can replace assets, premises or material goods, replacing a key person is not nearly as easy. Having the relevant protection policies in place will help you to ensure that your business can survive the loss of a key person – including yourself.

Whether you are a sole trader, a partnership, a limited liability partnership or a limited company there are specific policies to suit your needs. So, If you want to ensure that your business is properly protected, it’s important that you get some cover today.