Have you had to rethink your corporate protection policies since the unwelcome arrival of Covid-19? Perhaps it’s something you’ve never even considered. If that’s the case, it seems as though you’re not alone.
The shape of UK business
The UK business sector is mostly made up of small to medium sized enterprises (SMEs). In fact, 99% of businesses in this country are classed as an SME[1]. However, you might be surprised to learn that recent data suggests up to three quarters of our nation’s SME owners haven’t heard of relevant life plan or executive income protection[2].
More awareness needed
This comes from a survey conducted of more than 500 UK SME owners carried out by independent market research consultancy Savanta in June[2]. The data reveals several points highlighting the need for increased awareness around business protection, including:
- Nearly six out of 10 businesses said they would cease trading in less than a year of a key person dying or becoming critically ill.
- The death of a business owner was the top scenario for serious impacts on a business, with 52% of the responses.
- Three quarters of businesses surveyed said they had corporate debt or borrowing of some form, which is an increase on the 51% reported in 2019.
- 67% were borrowing more than £50,000, again higher than in 2019 (50%).
- Of those business that lack cover, 46% did not see the need, while 17% had not considered it at all.
The good news is that when hearing about the benefits of corporate protection, 85% of business owners were open to finding out more.
What’s available?
Business protection often falls under three main areas:
- Key person protection aims to avoid the negative impact that a prolonged absence of a key person may have on the business, such as loss of contacts, sales and knowledge.
- Shareholder/partnership protection exists to provide continuity of the business should a shareholder or partner die, by ensuring some or all of their shares can be purchased to retain control of the company, whilst also providing a fair value to their estate.
- Business loan protection enables outstanding company loans to be paid off if the business owner of the loan were to die or fall critically ill.
All these types of cover may be important depending on the size and scale of your business, and there may be other types of protection that are relevant to your business.
How we can help
We understand that considering the death of a key person in your business is never a nice thing to have to do. But based on the statistics above, we believe it’s vital to have those conversations, particularly as almost a third of businesses and 72% of sole traders do not have a continuity plan should the need for one arise.
Here at Brunsdon Financial, we can help you take the necessary steps to protecting your business with our comprehensive cover options available to suit your company’s needs, whatever shape and size.
