Beyond Growth: The Critical Role of Protection in Business Longevity

In Business, we always like to focus on the upside. Where is that big growth push coming from in Q1? What is our profitability looking like for this financial year? Whilst the upside is crucial to longevity, just as important for company survival is not neglecting the downside.

Whatever stage you are at, it is never too early or late to learn about business protection. You may be a startup founder, a director of an SME or a CEO of a larger corporate; this knowledge is relevant now or in the future.

Below, I will introduce the key types of protection and why they will be of benefit to your business. But before I name any of them in particular, please take note that all of the below can be put through the business.

Now, let’s begin…

Key Person Cover

I know it’s not nice to think about but imagine your Founding Partner was hit by a bus. How would your business cope?

Key person cover helps to safeguard a company against the death, terminal illness or specified critical illness of a key person. The ‘key person’ will normally be an individual whose knowledge, skills or leadership are essential to the operation and success of the company.

If the key person dies or becomes ill, the policy will pay a sum of money to the business. This money can then be used to help find a replacement or indeed offset any lost revenue from the loss of the key person.

Shareholder Protection Insurance

You may have different share holders in your business, or it may be a plan for the future. In such situations, shareholder protection insurance exists to provide financial security to business owners in the event of a death or illness of a shareholder.

The Protection provides the remaining shareholder’s the appropriate funds to buyout the affected shareholders beneficiaries, as their company stake would immediately become part of the deceased’s estate on death. This protection payout helps to maintain stability in the company, as well as ensuring that the interests of all stakeholders are protected.

Executive Income Protection

In business costs are high; particularly when you are growing your business in the early days. If a high-earning individual in the business gets ill or injured and cannot work, you don’t need the cost of covering them whilst also needing to bring in additional hands at the office.

Executive Income Protection is designed to protect high earning individuals, with additional features such as bonus cover, dividend cover and other forms of variable incomes that aren’t covered in more standard income protection plans. In the event of a valid claim, the policy will pay out monthly to the business to cover these costs.

Loan Protection

Most businesses at some point will need to take out a loan. Again, in periods of normal operation, servicing shouldn’t be an issue. Indeed, it wouldn’t have been granted if the lender thought otherwise. But in an unforeseen event, such as a key individual being unable to work due to illness, disability or death, money could be required to ensure that payments aren’t defaulted on.

Focusing on the downside is never going to be the first thing you want to talk about on a Monday morning. Though the ‘what if’ scenarios in your business won’t be easy discussions to have, make sure that you don’t neglect them. By their very nature, unlike some other aspects of business, we can’t be sure when these things will occur. All we can try to do is be informed and be prepared.