You’ve probably worked hard to deliver benefits to your employees, providing a competitive pension scheme, well-being perks, and group protection. This is great, but may means you’ve paid less attention to how to protect the business itself.

So, here are three types of business protection cover that could help you better protect your business and the value you’ve worked hard to create.

1. Key person protection

The development, growth, and success of your business likely depends on a handful of key employees. If anything untoward happened to your top team players, this could result in devastating consequences.

Even so, research from Vitality revealed that 37% of business owners had no protection in place to cover the possibility of themselves or a key member of staff dying or suffering a severe illness[1].

Keyperson cover could help to protect your business against the loss of key individuals or shareholders that are vital to its success.

Providing protection against death or critical illness of a key employee, in the event of a claim, the payout is made directly to the business. You can then use the money to help you through any tricky transition. Funds could, for example, be used to recruit a suitable replacement or replace lost profits.

Relevant life cover may also be of interest. This can be used to provide a death-in-service benefit to you and your staff. You may wish to offer relevant life cover as an employee perk, since it can also be treated as a business expense, helping to reduce your Corporation Tax bill.

2. Shareholder protection

What would happen to the business if you or another shareholder died or suffered a terminal illness?

Without the right protection in place, remaining shareholders might find themselves working with partners who have little or no interest in the business. Or beneficiaries could find themselves owning shares that nobody is prepared or able to buy.

Shareholders may be willing to buy the shares back from beneficiaries, but not be able to afford to. And it can be costly to borrow funds to help you do so.

Shareholder protection provides a lump sum to the remaining shareholders. This can be used to purchase remaining shares from the deceased or ill shareholder’s family or chosen beneficiaries.

This ensures that any shares remain in the business while reducing the financial turmoil caused by such a tragic situation. Meanwhile, for the shareholder’s family, it provides reassurance that they’ll receive fair value for the shares.

3. Business loan protection

As well as protecting your people, it’s also wise to arrange protection for any outstanding business loans you may have.

Loan protection provides funds to repay a business loan in the event an owner, director, or key person passes away or is diagnosed with a critical illness.

Being unable to repay loans can be a serious problem for a business following the death of a key person. Knowing you have business loan protection could give you greater confidence when planning for the future.

Get in touch

To find out more about how we can help you put plans in place to protect your business, please get in touch. Email info.wp@titanwh.com or call us on 0800 048 0150.

Please note

The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

[1] https://www.vitality.co.uk/media/financial-security-of-business-owners-at-risk/