A guide to business protection 2016

by Ben Heffer
Insight Analyst

April 2016

The latest business protection guide from Defaqto gathers together in one place all the information an adviser would need as we look again at the business protection market.

It sets out the high level principles of continuity planning and succession planning and identifies the key points to watch out for. It also sets out full details of the business propositions from the main providers active in this important market and, in particular, the help and support they can give advisers.

The products are relatively simple but by setting up life assurance or critical illness insurance in trust or on the ‘life of another’, it is possible to protect against the disruption to businesses that the death or serious illness of key employees, directors or partners might cause.

Continuity planning

Life assurance or critical illness cover can be written on the life of a key employee to replace the lost profits attributable to them should they die or be absent from the business due to serious illness. Similarly, key person income protection can be used to protect the business against long term sickness. Also, insurance policies can be set up to repay a corporate loan should it become necessary following the critical illness or death of a director or guarantor.

Succession planning

When a shareholder or partner dies, the future direction and viability of the business relies on the remaining executives being able to purchase the deceased’s share. Again life assurance can be set up to provide the funds to execute the share purchase agreement. Similarly, critical illness cover can be used to facilitate the exit from the business of individuals who succumb to serious illness and can no longer be involved.

For more information about business protection and the providers active in this market, please download the guide.