As a director, you play a crucial role in your business’s success. You make strategic decisions, manage daily operations, and lead your team. But what if something happens to you or another key individual? How would your business cope with the loss of a key person, shareholder, or guarantor?
Business protection insurance covers the financial impact of losing a key member of your business due to death, illness, or injury. As a director, understanding the five types of business protection can significantly benefit your company.
Protect your business from various risks, such as:
- Reduction in earnings, revenue, or profitability
- Elevated expenses related to recruiting and training a replacement
- Settlement of existing loans or obligations
- Diminished authority and oversight
- Disagreements with new stakeholders
- Decrease in personal earnings and benefits
- Compromised financial stability for your family
Here are the five essential types of business protection every director should know, and how they can benefit your business.
Key Person Protection
A key person is someone who significantly influences your business’s performance and profitability, such as a director, manager, or salesperson. Losing a key person can cause a drop in income, sales, or profits, and increase the costs of hiring and training a replacement.
Key person protection helps cover these losses and expenses, keeping your business running smoothly. It also assists in repaying any outstanding loans or debts for which the key person was responsible.
To find out more about key person protection and how to calculate the amount of cover you need, contact me today.
Shareholder Protection
A shareholder owns a share of your business and has a say in how it is run. Shareholder protection addresses the impact of losing a shareholder in your business. When a shareholder passes away or becomes critically ill, their shares could transfer to family members or their estate, potentially misaligning with your business vision or goals.
This protection allows you to buy back the shares from the deceased or critically ill shareholder, maintaining stability and continuity in your business. It helps prevent conflicts with new shareholders who might want to sell their shares or influence your decisions.
To learn more about shareholder protection and setting up a cross-option agreement, contact me today.
Executive Income Protection
An executive typically earns a high salary and enjoys various benefits, such as a pension, a car, or a bonus. Losing an executive can affect their personal income and lifestyle, as well as their family’s financial security.
Executive income protection pays a regular income to the executive if they cannot work due to illness or injury and covers the cost of their benefits. It also helps retain their loyalty and motivation, encouraging a swift return to work.
To find out more about executive income protection and how to compare different providers and policies, contact me today.
Relevant Life
A relevant life policy is a type of life insurance that pays a lump sum to the family or dependents of an employee or director if they die while working for your business. It is a tax-efficient way of providing a death benefit, as the business pays the premiums and these are not treated as a benefit in kind.
Relevant life policies help attract and retain talented employees and directors, demonstrating care for their well-being and their loved ones. They can also reduce your corporation tax liability, as premiums are deductible as a business expense.
For more information about relevant life policies, contact me today.
Business Loan Protection
A business loan helps finance your business activities, such as buying equipment, expanding premises, or investing in new opportunities. Losing a director, shareholder, or guarantor can affect your ability to repay the loan and put your business at risk of default.
Business loan protection covers the outstanding balance of the loan if the responsible person dies or becomes critically ill, protecting your assets, credit rating, and reputation.
To learn more about business loan protection and choosing the right level and type of cover, contact me today.
Conclusion
Business protection is essential for every director who wants to safeguard their business from the unexpected. It helps protect your income, profits, ownership, control, and reputation, as well as your personal and family’s financial security.
At West Wales Money, I specialise in providing business protection tailored to your needs and budget. As an independent advisor, I have access to the whole market and can offer expert advice, personalised quotes, and ongoing support.
If you’re interested in business protection insurance or want to review your existing coverage, please contact me today. I offer a free initial consultation and can arrange a meeting at your convenience.
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Now that you understand the essential protections needed for your business, it’s time to take action. Don’t wait until it’s too late—secure the future of your company today.
☎️ Call: 01267 887434 or 07508 147884
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