Defend the future of businesses

Graham Harvey, managing director of protection at AXA, says business protection may be as important as ever as the new coalition government settles into Number 10.

With the new coalition government’s emergency Budget just around the corner, it remains to be seen what impact the new administration will have on businesses and people across the nation.

A lot of businesses have been through what has felt like one of the toughest economic climates for a very long time and for those businesses that have survived, no doubt they will be chasing success as the recession seems to be relenting slowly.

Critical illness

The average age someone claims on a life or critical illness policy is 42 years old – an age when people are likely to have climbed quite a few rungs of the career ladder and might even be a director or partner in a firm.

Something I’m really aware of is that with the right people working with you, your business has the potential to flourish.  But what happens when a key person or a partner in a business becomes critically ill or dies?

The impact on a small- or medium-sized company can be significant, especially if that person uses their expertise to bring the money in. Equally, if a shareholder dies and the other shareholders wish to buy the deceased’s part of the business, how easy would it be to find that surplus money?

Business protection isn’t at the forefront of people’s minds when they have the day- to-day running of a business to take care of. But it can add that layer of security to a business, which could have the knock- on effect of saving more than just one person’s income.

Staying in control

Business protection allows people to stay in control of their company, be it through providing cash to stem any loss in profit because a key person is unable to work, or providing a lump sum to buy out someone’s share of a business if they die.

By advising their clients on business protection, IFAs have a real opportunity to talk to them about retirement planning, savings or even group arrangements for employees.

Policy reviews

But to harness those opportunities from selling protection to businesses that change naturally over time, it’s essential to review their policies regularly, thereby ensuring that the business is protected fully.

Regular reviews are also important because, like the protection market in general, competition among providers is fierce, and where there’s market competition, people can take advantage of more product choice and excellent rates. Flexibility is also important. Personnel changes in companies can occur quite often so making policy changes needs to be hassle free.