Business Protection: What It Is and Why You Need It
If you are a business owner, you know how hard it is to build and maintain a successful enterprise. Most people spend so many hours, money, and effort into their business, and you want to make sure it is protected from risks and threats. But have you considered what would happen to your business if you, your partner, or a key employee were to suffer a critical illness or die? How would your business cope with the loss of revenue, skills, or expertise? What would happen to your debt? There are a lot of questions that need answering.
This is where Business Protection comes in. Business protection encompasses various policies designed to shield your company from financial losses in the event of an owner's or employee's death or critical illness. The type of policy you choose plays a crucial role in safeguarding your business during challenging times. By ensuring you have the right protection in place, you fortify your enterprise to withstand potential disruptions and emerge stronger.
Here are some insights on two of the core ones:
Key person protection
Taking out key person protection could help to smooth over any transition if someone were to become ill or unable to work, as the pay-out can be used to cover the costs of recruiting a replacement, or even to mitigate any loss in profits. Whether your business is a limited company, a partnership, or you are a sole trader, a key person protection plan will provide cover for you or any partner or employee who is valuable to your business.
Shareholder protection - If a major shareholder becomes critically ill or dies, it can sometimes be difficult for the remaining shareholders to find the immediate funds they need to buy back that person’s shares. A shareholder protection policy provides life and/or critical illness cover, held under trust, so any pay-out will give them the means to buy the shares back, with the option of keeping them or selling that share of the business, while enabling the company to continue trading effectively.
How to Get Business Protection - If you are interested in getting Business Protection for your business, you should consult a professional adviser who can help you assess your business needs, compare different options and providers, and set up the cover in the most tax-efficient and cost-effective way. Once you have some in place, you should look to review this regularly and make sure it is still relevant to your current situation.
Speak with an adviser today to run through these with you in more detail
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Disclaimer: This blog post is for informational purposes and should not be considered financial advice. Always consult a financial adviser for personalised guidance.
