Business Protection Insurance provides an all important safety net for all types of businesses.
We believe that businesses of all sizes should consider Business Protection Insurance as part of the business plan from the first day of trading. Many businesses all over the UK cease trading for all sorts of reasons but many could be prevented had they had some form of Business Protection Insurance in place.
Business Protection Insurance ensures that you, your co-workers and the business itself are insured for the unexpected. When Business Protection Insurance is in place and you experience the unexpected you can:-
- Keep the business trading
- You can replace key individuals
- Protect corporate debt
- Buy out a shareholder if they become critically ill or buy their share from their estate if they die.
At Jigsaw Financial Associates Ltd, we consider business protection to be one of the central aspects of our service offering. We like to work with small and medium sized businesses, and to work in conjunction with your accountant wherever possible to ensure the most suitable cover is in place, and any tax benefits are fully realised at the same time.
Examples of the solutions we can implement for your business are shown below:
Business Loan Protection
The loss of a key person can put immense pressure on remaining owners and senior directors. Apart from increased workloads and potential loss of profits, there may well be the added burden of financial commitments such as outstanding business loans.
Lenders usually require this cover and directors may have given personal guarantees – often using their residential home as security – so there is the added need to ensure that dependants of key people are protected.
Directors may also have made loans to the company themselves, either by cash injection or by leaving salary, bonus or dividends in the business. Known as director loan accounts, these become repayable to the estate of a deceased person and need to be included in the sum assured. In a partnership there may be similar loan accounts owed to individual partners and these need to be covered in the same way. Even in the event of a critical illness, the repayment of such a loan would give the key person involved much needed personal financial security.
Shareholder or Partnership Protection
The death (or incapacity through a critical illness) of a key shareholder in a small company can often have devastating consequences not only for the family of the individual concerned, but also the business itself. On death, the spouse or civil partner often holds shares in a business they don’t understand, and the remaining shareholders often want to buy those shares at market value to ensure the future success of the business, but rarely have sufficient funds available to do so. In many cases, this can result in declining fortunes for the business. Shareholder protection is designed to protect the business against this situation arising by providing a lump sum to ensure the shares can be bought back easily, and is one of the central foundations of good business planning.
Key Person Cover
A key person can be anyone in your business that is critical to the ongoing success of that business. It can often be a senior manager or director, but could equally be someone whose knowledge or skills are critical to the ongoing success of the business. Losing such key people through unexpected death or critical illness could also have serious consequences for the business itself, and keyperson cover provides a lump sum to the business, to cover the cost of recruiting and training a suitable replacement.
Life Cover for Employees
Life cover for employees is a valuable benefit for many employees, and schemes can often be set up in a tax efficient way and thus reduce taxable profits. In the past, small businesses have often found it challenging to set up these schemes as they usually require a minimum number of employees, but these have now been overcome with new solutions which mean that companies with even only one employee can have employer sponsored life cover.
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