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The Life Insurance Market
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New research released by Scottish Widows last week showed that 81% of small-business people who have key people in their businesses are not covered for the loss in profit or cost of replacing those people.
LifeSearch believe two of the most important types of cover are Keyperson Cover and Shareholder Protection. The main aim of Keyperson Insurance is to ensure that the loss of someone important to the business is compensated to cover the financial impact on the business. However, not every director is a key man and won’t necessarily be of the same value so they should consider each case individually depending on each director’s value to the business.
Shareholder Protection is used to provide a payout when a shareholder covered by the policy dies. The money can then be used by the surviving shareholders to repurchase the shares, if required, which may have passed to a beneficiary who does not have the skill or experience to make a worthwhile contribution to the business.
Some more key facts from Scottish Widows:
77% of sole traders who have a key person in their business, do not think their business would survive the loss of that key person
73% of sole traders do not have a business exit strategy in place1,
Just 2% of sole traders are covered for the loss of a key person upon death, compared to 15% who have insurance in place for office equipment
Business Protection is a little known but vital type of insurance. LifeSearch offer advice in all areas. More information is available at www.lifesearchbusiness.com.
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