Any business, large or small, can face the unexpected at any time. Whether your business is in a partnership, limited liability partnership (LLP), a sole trader or a limited company, you can reduce some risks by planning ahead. Life itself is unpredictable and having talented people in any business is core to its success. It is those very people that you need to provide a contingency for should their ability within your business disappear or decline. There are various insurance plans that offer different ways of mitigating these unknown situations.


Business Loan Protection

This is used to help pay off debts if the owner, a partner or a director were to die or was unable to work due to diagnosis of a critical illness or a health issue that is listed in the terms and conditions of a plan. These products can be used to safeguard various types of commercial debt, including overdrafts, business loans, commercial mortgages and directors’ loans, and the debt covered can be any size.
For example, in the event of death, a director’s loan would need to be fully repaid. Having business loan protection in place means this could be prepared for and protected against rather than an unpleasant scare.


Key Man Protection

Is a life and/or critical illness policy to cover the people who are crucial to your company’s success. If any of these key individuals were to suddenly die or fall seriously ill, a key man insurance policy could protect your business against the financial repercussions. A lump sum is paid-out directly to the business and this can be used to cover the cost of any profit losses, replacement staff or loan repayments. It could also keep you afloat during a difficult time and thus be the difference between survival or closure. 
For example, would an employee’s absence affect business expansion plans or ongoing projects? Would the business be in danger of losing customer orders?


Relevant Life Protection

Relevant life protection is a death in service benefit offered by an employer to its employees (including directors) – a policy can also cover serious illness. The difference between key man protection and relevant life protection is that key man is protection for the business whereas relevant life is protection for the employee and their family. 
For example, this can be useful for a business where it isn’t cost effective to set up a group life scheme but would like to provide the benefit for their staff. 


Shareholder Protection

This is designed to help existing shareholders or business owners buy the shares which somebody who has died or is too ill to work previously owned.
For example, upon the death of one of the owners, the surviving owners can avoid that share of the business then being owned by someone else who has no interest in the business, or even by another business that might be in a position to make a takeover bid.

Think about your business structure. Who is core to it? How many core people are there? How long could the business cope if any of them were suddenly unavailable? If you take the time to plan ahead, and mind your business, the unavoidable could become none of your business.

If you would like more information about any of the subjects raised in this article, please speak to your Dentons Wealth adviser.

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