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Why every business needs a safety net

is your business insured?

 Why every business needs a safety net

You insure your house, you insure the cat and the dog, you may even insure your health, but what about your business? What happens if a Director/Shareholder of a company dies unexpectedly?

Every business needs a safety net. After all, it represents not only the livelihood of you and your family, but also that of your employees and fellow stakeholders.

Ever heard of share holder protection? Even though it’s widely used throughout the business world, not everyone has an understanding of what it is, how it works and what the benefits are.

Director share protection is a type of life insurance policy (with optional critical illness cover) taken out to make sure that in the event of a Director/shareholder developing a critical illness (if you choose this option) or passing away, remaining shareholders have the financial means to purchase their share/s and ensure the business continues to run smoothly.

Thinking the Unthinkable

Imagine, for a moment, what would happen if one of your company’s shareholders was to develop a critical illness or die. Would your company’s shareholders have the financial capital to purchase this director’s share of the business outright, or would there be a risk of shares being inherited by descendants with little or no interest in or knowledge of the business – and potentially being sold off to competitors? Or they run your business in to the ground.

Director share protection provides a lump sum and ensures continuity of income  in the event of a shareholder’s critical or long-term illness (if opted for) or death, allowing remaining others to buy their shares without the stress of having to find the necessary funds. Without it, the financial strain on the business can be immense.

Figures released by the Association of British Insurers (ABI) and Group Risk Development (GRiD) show that the insurance industry paid out a record £5 billion in protection claims in 2017 – representing an increase of more than £340 million year-on-year. Figures from leading insurers show that cancer tops both life claims pay-outs and terminal illness claims.

Save tax, save stress

This is not a search, click and buy policy. Cosgrove Brown;s experienced team of advisors has been assisting many business owners protect their companies and their employees against the risks posed by unexpected critical illness and death. Relevant life cover for staff, power of attorney agreements for business owners and share protection insurance are some of the other expert services available.

Share protection and relevant life policies are tax deductible so by protecting your Director/Shareholders you are also reducing the company tax bill compliments of HMRC, sounds good doesn’t it?

Don’t let your business fall in to the abyss.