Given the course that 2020 has taken so far, we’re sure that you’re aware of life’s outstanding ability to produce the unexpected. Although no one likes to spend too much time thinking about worst case scenarios, for business owners it’s worth putting the steps in place to mitigate the negative effects to their firm should something bad happen.
After all, you don’t want yourself or your family to be worrying about your business during a difficult time. As far as we’re concerned, your personal life should always take priority in times like these.
If you have a business, you probably have some form of commercial insurance like employers’ liability insurance. However, it’s certainly worth considering some form of business protection insurance if you don’t already have it. These insurance policies can really take the pressure off you, your loved ones and your business during tough times.
Business insurance is about people too
Businesses are more than just their premises, equipment and bank balance. Most SMEs are reliant on one or two key individuals (likely the owners) who have the vision and commitment to keep it driving forward. You need to consider how the business would survive if it were to lose a crucial individual as a result of his or her ill health or death. This is where business protection comes in.
There are three different types of business protection insurance:
- Business Loan Protection
- Key Person Protection
- Share Protection
Business Loan Protection
Business Loan Protection can cover any type of commercial debt, from overdrafts to commercial mortgages. These allow owners, partners and directors to insure their outstanding debts so that they are repaid in the event of their death. Many loans, like Directors’ Loans, have to be fully repaid in the event of the director’s death.
The larger the debt, the higher the premiums will be. This said, for simple life cover this is one of the cheapest forms of business protection insurance.
Most commercial lenders ask for a named individual (or individuals) as guarantors on the loan agreement, in most cases the business owner or partners. Business Loan Protection insurance pays out in the event of the guarantor’s death.