Business Advice

Business Protection Insurance is a way of protecting your business. Essentially there are five elements to Business Protection Insurance:

  • Key person insurance Director/shareholder protection
  • Partnership protection Business loan protection
  • Sole trader protection

Business Protection Insurance clearly provides an all-important safety net for all types of businesses. It is all too common for Businesses to view Business Protection Insurance as an optional extra. It would be a far safer way of trading to consider Business Protection Insurance as part of the business plan from the first day of trading. Businesses all over the UK cease trading for all sorts of reasons but many of which could be prevented had they had some form of Business Protection Insurance in place. So why is Business Protection Insurance necessary?

Business Protection Insurance ensures that you, your co-workers and the business itself are insured for the unexpected. When Business Protection Insurance is in place and you experience the unexpected you can:

  • Keep the business trading
  • You can replace key individuals
  • Protect corporate debt
  • Buy out a shareholder if they become critically ill or buy their share from their estate if they die.
  • Key Person Insurance
  • Sole Trader Protection

Sole trading involves a lot of work where you could be in contact with the public, which increases your needs for a public liability insurance policy. While it is not a legal requirement to have a public liability policy, it is advisable to cover yourself against any liability claims i.e. injury to the public caused by your negligence. The cost of a public liability insurance policy for a sole trader is negligible when compared to the risk and cost of defending yourself against a public liability claim without any insurance. Liability claims are often for thousands and even millions of pounds which is obviously enough to bankrupt most businesses if they don’t have an insurance policy to cover themselves.

If you have even one employee then you must (by law) have an employer’s liability insurance policy in place, not having a policy in place if required is not only illegal but irresponsible since you are leaving your business open to large liability claims which could ultimately mean the end of your business. An employer’s liability insurance policy would usually cover you if an employee was to hold you liable for any injury they sustained while working under the direction of you. As you can imagine these claims for injury will often be for very large amounts of money.

Business Loan Protection

When a business takes out a loan, it needs to ensure that the repayments can be met no matter what happens to the business or its individual owners. Business Loan Protection will ensure the business loan can be repaid in full upon death or diagnosis of a specified critical illness (where that option is selected) of the life insured. If an overdraft, loan or commercial mortgage is unable to be repaid due to the loss of a key person, it can have huge implications for the business.As its name suggests, Business Loan Protection is a type of insurance designed to repay all or part of a business’s debts upon

As its name suggests, Business Loan Protection is a type of insurance designed to repay all or part of a business’s debts upon death of the life insured. It is taken out to provide cover against death or a critical illness (where that option is chosen) that could adversely affect a business’s ability to repay its borrowings.

Business Loan Protection will ensure the business is protected against situations that could cause a business to struggle to carry on with its day-to-day operations and make debt repayments on time. The loan protection policy provides the business with a lump sum to repay debt in the event of death or critical illness (where that option is selected) of the key person(s) covered.

Group Pension Plans

Some employers offer these schemes. They build up a personal fund for each employee which is converted into an income at retirement, but they differ from occupational defined contribution schemes. They are a type of money purchase pension.

The scheme is run by the pension provider that your employer chooses, but it is an individual contract between you and the provider. The provider claims tax relief at the basic rate and adds it to your fund. If you are a higher-rate taxpayer, you will need to claim the additional rebate through your tax return.

How Does it Work?

The pension fund builds up using your contributions and, where they are made, your employer’s contributions, investment returns and tax relief. It helps to think of money purchase pensions as having two stages.

The pension fund is usually invested in stocks and shares, along with other investments, with the aim of growing the fund over the years before you retire. You can usually choose from a range of funds to invest in. Remember though that the value of investments may go up or down.

Aquila Financial Services is regulated and authorised by the Financial Conduct Authority. Firm reference number 539133.