In this article, I will outline the reasons for considering business protection.  I will pose the questions business owners should ask themselves.  Over the next three articles, I will look at Shareholder Protection, Key Person Protection and Relevant Life Plans.

Why consider protecting your business

In my job, I often find myself talking about death and unfortunately, in my job, like in life, it cannot be avoided. But are businesses protected against this inevitable eventuality?

According to research (Legal & General Business Protection Research 2015), over 50% of businesses had no key person protection, over half had no shareholder protection plan in place, 42% of sole traders have no corporate debt protection and 28% of business owners had never heard of Relevant Life Policies.

This is concerning in light of that fact that 40% of businesses would cease trading if they lost a Key Person (Legal and General, 2015). Bearing in mind that in the UK, 1 in 2 people in the UK born after 1960 will be diagnosed with some form of cancer during their lifetime. In 2012, there were around 162,000 deaths from cancer (Source – Cancer Research website 2016). In addition, every 5 minutes someone in the UK has a heart attack (Source – British Heart Foundation website 2016).

Based on data from England and Wales Life Tables, Office of National Statistics, (2015) the following table shows the likelihood of one person out of a group of male or female non-smokers dying before 65, assuming standard mortality for that age:

	Number of People (business owners)
Age	1	2	3	4	5	10
30	10%	19%	27%	35%	41%	65%
35	10%	19%	26%	34%	40%	64%
40	9%	18%	25%	33%	39%	63%
45	9%	17%	24%	31%	37%	60%
50	8%	15%	22%	21%	33%	56%

So, in a company with 3 shareholders aged 40, there is a 25% chance that one of them will die before they reach the age of 65!

Questions to ask yourself

Companies and business owners needs to ask themselves:

• What would happen if a shareholder died or was diagnosed with a Critical Illness?

• Who would inherit the shares?

• Would they want their spouse involved in the business?

• Could the surviving shareholders afford to purchase the shares to buy the spouse or critically ill Director out of the company?

• If the deceased had made a loan to the company, how would the debt be repaid?

• What would happen to the business if something happened to a key-person – would the business survive? How would lost revenue be covered?

Business Protection can protect business owners and businesses themselves against the death or critical illness of a shareholder or a key person within the business.

Over the coming weeks, look out for more on:

• Shareholder Protection

• Key Person Protection

• Relevant Life Plans

If you would like to discuss your Business Protection requirements, contact me for a complimentary no obligation initial meeting.