Covid created an entirely unprecedented situation that will live long in the memory of everyone involved, but especially for business owners.
The pandemic has made many business owners take stock and realise how quickly you can go from operating one day to not at all the next.
No doubt many business owners took a laissez-faire approach to protection, banking on the fact that emergencies are rare.
That’s why having business protection and insurance is more important than ever: it can make sure you, your family and your business are protected in the event that you’re unable to work.
Insurance and protection could provide security for your business
With Covid’s impacts still lingering, it’s a perfect example of why you should always be covered in the event of an emergency.
The organisers of the world-famous tennis tournament, Wimbledon, have shown just how valuable long-term planning can be.
They insured themselves against the event not being able to take place in 2003, after the first SARS outbreak threatened to do exactly what happened in 2020.
Wimbledon paid out around £1.5 million in insurance per year over the 17 years since, a strategy that other sport organisers saw as foolish at the time.
But, when Wimbledon’s 2020 tournament was cancelled, they received a remarkable payout of £114 million, a vital windfall that ensured no one involved went without being paid.
Obviously, you’re unlikely to receive this much, but it could make all the difference in keeping your business afloat.
Protection options you could consider
While Covid is a unique event, it’s just an example of what can go wrong. There are plenty of other events that could befall you and your business that could see you unable to operate, some of which could be just as unpredictable as this one.
As a result, having protection in place is a sensible, practical decision you can make. A few options you could consider are:
Key person insurance
Your business may be reliant on some individuals more than others, so you could consider key person insurance.
This type of insurance pays out a tax-free lump sum directly to the business if the insured individual dies or is diagnosed with a serious illness while working with you.
If your business is highly dependent on certain people, this could provide much needed cover in the event that they’re no longer able to perform their role.
Relevant life insurance
Relevant life insurance provides life cover for anyone you choose in your business, including you. It pays a tax-free lump sum to the chosen beneficiaries, potentially providing much-needed financial support to a family who have just lost someone.
Bear in mind sole traders, equity partners in a partnership, and members of a limited liability partnership are not eligible for relevant life insurance. If this applies to you, please speak to us about finding more suitable protection options.
If a key shareholder dies in the business, shareholder protection can provide a lump sum to allow the remaining shareholders to buy out the stake in the business.
This would mean, if you died unexpectedly, the remaining shareholders would be able to buy your stake in cash. This could provide your family with much-needed money in your absence.
Protect your business
If you’d like to know what type of protection options would be best for your business, please contact us.
Email email@example.com or call 0131 339 2281 to speak to us.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.