Business Protection Insurance
Protection Direct, specialists in Business Protection
Protection Direct are specialists in Business Protection insurance and have helped key individuals from businesses across the UK to get the cover they need to protect themselves and their business. Business protection can be a complex policy so we recommend you speak to one of our friendly advisors to get a detailed quote specific to your business needs. All our no obligation quotes are free and can be done over the phone to fit in with your busy life.
In the meantime we have put together a short summary of the different types of policies below.
What is it?
Business protection insurance is a broad term that refers to the insurance cover in place to protect a business from the impact of a key person dying or becoming critically ill.
It helps self-employed business owners plan for the unexpected by providing cover to ensure the business can continue with minimal disruption following the loss of one of their key employees or one of the business owners through death, critical illness or temporary disablement.
Relevant Life Policy
A Relevant Life Plan is a life insurance plan available to employers to provide an individual death in service benefit for their employees.
It’s designed to pay a lump sum to the employee’s family if the employee dies when employed, while the plan is in place.
Terminal Illness Cover is included, which could pay out if the employee, whilst employed and covered by the plan, is diagnosed with a terminal illness, with life expectancy of less than 12 months. Premiums are paid, and the policy is owned, by the employer.
The policy must be placed into a Relevant Life Plan Trust, which can be tax-efficient for both employee and employer.
Key Person Insurance
A key person insurance policy (also know as key man insurance) is a policy to protect a business if a key person is unable to work causing a detrimental effect on the efficient running of the business. A key person can be defined as any employee or director whose absence through illness would negatively company profits or ability to maintain daily activities.
For example, if the key person suffers a critical illness or dies, the plan benefits will be paid directly to the company. The funds can be used to meet the company’s financial needs while it re-organises or recruits a replacement. In the case of a critical illness claim, it's possible the key person will return to work, so the funds can be used to pay for a temporary replacement or replace lost profits.
A key person is a tax deductible expense so can often be an efficient way to protect your business against sudden ill health or death.
Shareholder Protection differs from Key Person insurance in that this type of policy can only be bought by a shareholder or partner of a business.
Shareholder Protection allows for a planned succession of a shareholder or partner’s business stake should they fall ill or die, with options such as required buybacks. Each shareholder or partner should have their own cover in place to protect the business.