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Do I Need Business Insurance?

As a business owner or manager, protecting your company against unexpected risks is essential. While general business insurance covers property and liability, certain types of insurance are specifically designed to secure the financial stability and continuity of your business.

We’ll explore the types of business insurance: Keyperson Insurance, Relevant Life Cover, Shareholder Protection, and Group Protection.

Does a Business Need Insurance?

The answer depends on the nature and size of your business, but for most, the answer is a yes. Business insurance is not just a precaution; it’s a fundamental part of risk management. Whether you have a small or a large team, insurance helps protect against unexpected events that could disrupt your business or lead to financial losses.

What Insurance Do I Need for My Business?

Keyperson Insurance

Keyperson insurance provides financial protection if an essential employee or business owner becomes critically ill or passes away. These individuals often play a pivotal role in driving revenue, maintaining client relationships, or managing operations. Losing them unexpectedly could have a significant impact on your business.

How It Works

  • The business takes out a policy on the key individual.
  • If the insured individual becomes critically ill or dies, the policy pays out a lump sum to the business.
  • These funds can be used to cover costs such as recruiting and training a replacement, maintaining cash flow, or repaying business loans.

Who Needs It?

  • Small businesses who are heavily reliant on specific individuals.
  • Companies with employees possessing unique skills or critical industry knowledge.
  • Startups where a founder’s absence could disrupt growth.

Keyperson insurance ensures that the business can navigate unforeseen challenges without jeopardising its future.

Relevant Life Insurance

Relevant Life Cover is a tax-efficient policy that allows businesses to offer death-in-service benefits to employees. This is particularly appealing to small businesses of 1-6 people who don’t qualify for group life insurance schemes.

Key Benefits

  • Tax Efficiency: Premiums are usually considered a business expense and are not taxed as a benefit in kind for the employee.
  • Employee Attraction and Retention: Offering a valuable benefit like Relevant Life Cover can help attract and retain top talent.
  • Customise Cover: Policy cover amounts can be tailored to individual employees, making it a flexible option.

Who Is It For?

  • Small businesses wanting to offer competitive employee benefits.
  • Directors or contractors looking for personal life cover through their company.

By providing financial support to an employee’s family in the event of their death, Relevant Life Cover shows a commitment to employee welfare.

Group Protection

Group protection policies offer collective insurance solutions for 6 or more employees, including group life insurance, income protection, and critical illness cover. These benefits provide a financial payout for employees while enhancing your business’s appeal as an employer.

Key Advantages

  • Employee Security: Group policies ensure employees and their families are financially protected in case of illness, injury, or death.
  • Boosts Morale: Offering group protection shows employees they are valued.
  • Cost-Effective: Group policies are often more affordable than individual cover for each employee.
  • No individual medical underwriting required – Employees with pre-existing medical conditions that might otherwise result in a life insurance decline can still be covered under the group policy.

Shareholder Protection

Shareholder protection is a type of business insurance designed to help protect a company and its shareholders in the event that one of its owners (shareholders) passes away or is diagnosed with a critical illness. This type of cover ensures financial stability and continuity of ownership by providing a lump sum payment to facilitate the transfer of shares or compensate the remaining shareholders.

How It Works

  • Shareholders take out life insurance or critical illness policies, often in trust, to cover the value of their shares.
  • A legal agreement ensures the shares can be bought by the remaining shareholders or sold by the affected shareholder’s estate.
  • The policy pays out, and the funds are used to buy back the shares, ensuring smooth transfer and business continuity.

Who Needs It?

  • Businesses with Multiple Shareholders
  • SMEs and Family-Owned Businesses
  • Businesses Where Ownership Continuity is Critical

Common Types of Group Protection

  • Group Life Insurance: Pays a lump sum to an employee’s family if they pass away.
  • Group Income Protection: Provides ongoing income to employees unable to work due to long-term illness or injury.
  • Group Critical Illness Cover: Offers a lump sum if an employee is diagnosed with a specified serious illness.

By investing in these protections, you’re not just managing risk—you’re building resilience for your business’s future.

Assessing Your Business’s Insurance Needs

To determine whether your business needs insurance, consider the following questions:

  • What are the risks in your industry? Is it highly competitive, or does it involve hazardous work environments that increase the likelihood of accidents or illnesses?
  • How many employees do you have? If you have between 1-3 employees, you may be eligible for Relevant Life Cover. Businesses with 3 or more employees can apply for Group Protection.
  • Do you have valuable employees? If you rely on key individuals for business success, Keyperson Insurance can cover their financial worth in case of illness or death.

By assessing your business’s risks, you can choose the right types of business insurance that will protect your assets, ensure continuous success, and give you peace of mind.

Business Insurance with The Insurance Surgery

At The Insurance Surgery, we specialise in providing expert advice on business insurance solutions. Whether you’re protecting a key employee or offering competitive benefits, we’ll help you find the right policy for your needs.

Contact us today to protect your business against the unexpected.