Business Protection Advice

As a business owner, planning for worst-case scenarios can mean the difference between disaster and success.

67% of business owners say their business is their household’s main source of income1. It’s vital to ensure your company will survive and flourish, even if you or a member of your team can no longer work due to illness, disability, or death.

At Liberty Partnership, our business protection insurance safeguards your business’s finances, should you or a key employee face death or critical illness. From providing expert employees to cover the loss of a core person in your business, to life plans with tax-efficient payouts, we give you the confidence to run your business, knowing you’re covered.

We offer a range of business protection options, and we’ll work with you to tailor a plan unique to your business’s needs. We’ll safeguard your company’s interests, protect you from damaging crises and give you the peace of mind you deserve.

What is business protection insurance?

Business protection is a term encompassing a collection of insurance policies that protect a business from financial losses arising from the loss of a business owner or key employees due to death, illness, or disablement.

As well as ensuring financial security, business protection helps alleviate disruption to allow businesses to continue to trade and adjust through an unexpected transition.

Business protection is available for sole traders, partnerships, shareholders, and key employees.

There are four forms of business protection to consider:

  • Business loan protection
  • Key person protection
  • Shareholder protection
  • Relevant life insurance

Do I need business protection?

More than half of UK businesses say they would cease trading if a key person within their business was to die. Somewhat morbid, such eventualities are not nice to imagine and are unsurprisingly overlooked by many business owners.

Do you have a contingency plan in place for the loss of key persons within your business? Would you benefit from a financial safety net?

If you’re a business owner without any business protection insurance in place, talking to an expert financial advisor will help you identify any vulnerabilities within your business.

Our advisors can offer specialist knowledge and advice to help you assess your needs and to inform you of your best options to protect your profits and team.

Business protection varies, with arrangements being set up to specifically meet the needs of a particular business.  We can help you determine the most appropriate protection for you and provide you with clarity on the tax implications.

Life has a tendency to be unexpected, but having appropriate business protection in place will help you to handle unfortunate losses smoothly, keeping your business afloat.

Business protection solutions

There are four types of business protection insurances available:

Key person protection

A key person is somebody who significantly contributes to the success of a business. Staff are often a businesses most valuable asset and their loss can have detrimental effects.

Key person protection offers protection for a business in the event of the death of a key person, or in the event that they become critically ill or disabled.

This insurance is designed to provide financial cover for losses or costs incurred in such an event, while recruiting a replacement, or reorganising.

Many businesses overlook the impact the loss of a key person can have. Sales and profits can decline while a business recovers, having lost the skills, knowledge or experience that individual possessed.

A key person can be anyone within the business who contributes significantly to the financial success of the business. This can include owners, sole traders, technical experts, managers, specialists and more.

Business loan protection

Over 50% of UK businesses have some form of debt, with many businesses opting to take out a loan to start up or expand.

The responsibility and ability to repay that loan will often lie with a business owner or guarantor, and in the event of their death or critical illness, business loan protection can provide the funds for repayment.

Having business loan protection negates the need to find a lender and source the funds to repay an outstanding loan, at a time when the business or family of a sole trader are naturally occupied, under such difficult circumstances.

Business loan protection can be used as security for several types of loans, such as a commercial mortgage, director’s loan, venture capital loans and personal guarantees.

The money needed to repay the loan can be paid out to the business or family members, to cover the cost of upfront repayment, or to allow for a continuation of the previously agreed loan repayment schedule. It is also possible to select for the pay-out to go to the lender directly, for less disruption.

Shareholder protection

If your business partner (or another key shareholder) becomes critically ill or dies, shareholder protection ensures that you have the funds to buy their shares back, and keep them within the company.

Rather than risk shares being sold to people you don’t know, or being inherited by a shareholder’s spouse or family member, shareholder protection allows you to keep control of the shares as the company’s surviving owner.

As shareholders are the owners of a company, a lack of shareholder protection could lead to unwelcome situations where anyone who inherits your deceased partner’s shares could get involved in your business activities.

Buying back shares also means that your company will have a smoother transition, as you adjust to working life without your business partner or major shareholder.

Relevant life plan

A relevant life plan is a death in service plan for directors on PAYE and employees, that provides a pay-out to a staff members’ family in the event of death. 

Relevant life plans offer tax-efficient life insurance for businesses that don’t meet the qualifications for group life schemes, or want additional cover for employees than is provided by their current group scheme.

Being able to offer this benefit to your team may help you attract new staff and retain existing employees.

Business protection advice

If you are unsure whether you need business protection, or know you need to put some form of protection in place, but aren’t sure where to begin, get in touch with us. We will consider your individual circumstances and advise on the most appropriate options for cover, to help ensure your business is sufficiently prepared for loss of life or critical illness.