These past 20 months have been tough for everyone, but they’ve been particularly arduous for UK business owners.

According to figures from the Centre for Economics and Business Research (CEBR) published in the Guardian, from the first lockdown in March 2020 to March 2021, lockdowns cost the UK economy £251 billion.

If there’s one thing you should take away from everything that’s happened since the start of the Covid-19 pandemic, it’s that the unexpected can happen at any point.

That’s why it’s important to consider all the various protection options available for your business, so that you can secure your personal financial situation for you and your family.

It can feel like there’s even more to think about when insuring your business – after all, you may have shareholders and employees to think about, too.

So, here are some of the most popular protection measures that you might want to consider to insure yourself as a business owner.

3 types of protection for business owners

Firstly, you should give some thought to the personal protection options that you should consider as a business owner.

1. Income protection insurance

Income protection insurance will pay you a fixed income if you become too ill to work. Typically, you can expect to receive around half to two-thirds of your pre-tax income from your cover.

These payments will continue until you return to paid work or retire, whichever comes first.

This can be a good option if you’re self-employed or a sole trader.

2. Critical illness cover

Critical illness cover pays out a tax-free lump sum if you become critically ill while the cover is active.

To receive the payments, you’ll have to be diagnosed with one of the conditions that your insurer provides cover for. You’re then free to use this lump sum however you see fit.

3. Personal life insurance

Life insurance pays out a lump sum to your family if you die or are diagnosed with a terminal illness while the cover is active. This money could be invaluable to your family, providing them with much needed income at a difficult time.

Personal life insurance payouts can also be used to make mortgage payments. This could help ensure that your family are able to stay in your home if the worst were to happen to you.

If you pay for your insurance through your limited company and the policy is written in trust, the premiums are an allowable business expense.

This makes it a particulary attractive option for small company owners who don’t have the resources or the need to set up a group life scheme.

4 types of business protection

Your income is likely to be at least partially dependent on your business. So, as well as covering yourself as an individual, you should consider options that insure the business, too.

1. Business loan protection

Business loan protection can help to cover the costs of any business debt, such as a loan, commercial mortgage, or a director’s loan, in the event that you or one of your business partners dies.

This protection can be extremely important if there’s debt in your business. Otherwise, the business could be put in peril if you or another key person were to die or become terminally ill while still responsible for a debt.

2. Key person insurance

Key person insurance pays out a lump sum to a business in the event that a key person named on the policy passes away or becomes terminally ill.

Often, businesses are reliant on specific, key members of staff, whether that’s you or one of your directors or managers. But, if you were to lose them, the business may suddenly become difficult to operate.

Having key person insurance in place means the business will directly receive a payment in the event that you lose a key individual. This money could be crucial in keeping your business going.

3. Relevant life cover

Relevant life cover essentially means offering personal life insurance to your employees, paying out a lump sum to their beneficiaries if they die while in your employment.

This has two key benefits for your business. Firstly, offering relevant life cover can be an enticing perk for new talent, especially as it can be more cost-effective for employees to have relevant life cover from their employer than to pay for it themselves.

Additionally, relevant life cover is typically a tax-deductible business expense. That means offering a death in service benefit to your employees can also be a tax-efficient choice for you.

4. Shareholder protection

Shareholder protection gives you the money to buy shares back from a partner who is terminally ill or from their beneficiaries if the partner has died.

This can be particularly important as, if a key shareholder dies with a stake in your business, it could cause severe disruption while you work to sort it out.

Having this cover in place gives you a way to stay in control of your business, while also ensuring that you’re able to continue serving your clients and customers to your high standards.

How we can help at Cordiner Wealth

If you’d like any support or guidance on finding the right protection for you and your business, you should consider working with us at Cordiner Wealth.

We can advise you on the right protection options that are most suitable for you. Once we’ve discussed this and helped you decide what you need, we can then find and implement specific cover so you can be confident that you’re protected in case you ever need it.

We’ll regularly check that your cover is appropriate for you and suggest changes if we feel it’s necessary.

We can also review your existing protection cover and provide guidance and advice as to whether it’s suitable for yours, your family’s, and your business’s needs.

No matter what kind of business you run, knowing that you’ll always be covered in the event of the unexpected can give you the peace of mind you need.

Work with us

Please do get in touch with us at Cordiner Wealth if you’d like to find out more about how we can help find the right protection options for you and your business.

Email hello@cordinerwealth.co.uk or call 0113 262 1242.

Please note

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.