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Building and protecting your wealth

Does Your Business Need Protection Insurance Too?

We have covered the various types of personal wealth protection policies available and the benefits of each, but did you know that you can also protect your business in the same way?

This does not constitute advice and advice should be sought in all instances before acting on it.

If you are a small business owner, it’s smart to be prepared for a key person in your company receiving an unexpected critical illness diagnosis, or even worse – a death that would have a significant impact on the running of the business. If you need to keep your business going no matter what happens, then business protection insurance might be right for you.

What is business protection insurance?

Like personal wealth protection, business protection is actually a range of insurance policies. They’re designed to help protect businesses from financial loss in case a key person dies, is diagnosed with a critical illness, or is no longer able to work due to disablement.

The insurance can be taken out to protect partnerships, shareholders, sole traders, and key employees, but you can customise your insurance policies to your business’ unique needs. You can also set up a business protection insurance policy to insure more than one life. The surviving business or owners of a business would get a cash lump sum if a claim needed to be made.

The four types of business protection insurance policies:

Key person insurance

Key person insurance can cover any key employee, which is defined as anyone whose loss would affect the business’s ability to maintain turnover or generate profits. There are various roles within a business that would be classed as key, for instance in a medical or dental practice:

  • Business and practice owners
  • GPs and Dentists
  • Other clinical staff
  • Practice managers
  • Other non-clinical staff such as finance or other directors

In the event of a claim, a business can use the funds to recruit a suitable replacement, such as a locum, or replace lost profits.

Business loan insurance

Business loan insurance protects the person guaranteeing the debt, usually the business owner or possibly a partner or business director. The pay out from a claim would go toward helping the company recover from potential financial disruption.

Shareholder protection insurance

Shareholder protection insurance covers business owners. It allows the remaining owners to buy the shares from the deceased’s state for a fair value so they are able to retain control of the business.

Relevant life insurance

A relevant life insurance policy is a death in service benefit for small business employees that your employer might offer. It’s paid for and set up by your employer and the pay out goes to your family in the form of a tax-free lump sum if you die or are diagnosed with a terminal condition while you’re in their employment.

Get professional advice

If you want to consider business protection insurance as a way to insure your business against the loss of a key employee or a business owner due to death, long-term serious illness, or disablement, get in touch with us today.

We can discuss your individual circumstances and help you identify which policies would benefit you most and how you can incorporate a business protection policy into your overall financial plan.

Considering how best to protect your practice?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


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