Asking the right questions to know your customer including a fact find will enable you to understand the potential implications and loss to the business and identify the correct solutions for them.
Advisers should consider the ownership of the company and any financial liabilities that may emerge from that, according to Dougy Grant, protection director of Aegon. Any financial exposures such as business loans should be considered, he adds.
How financial exposures would be met in the event of death, terminal illness or critical illness must be calculated.
Bosses should also be encouraged to frankly consider if part of the business is dependent on the particular knowledge of a key person, for example, sales contacts, third party relationships, or is particular financial or technical knowledge integral to success?
Mr Grant says: “What would happen to the business in the event of death, terminal illness, critical illness, or long term incapacity?
“Would profits be impacted? If the business is small but has valued employees, it may be a good idea to encourage their loyalty by offering death in service cover.”
The key elements to focus on, according to Emma Davies, market development manager of Legal & General, would be their share protection, key person and business debt needs.
Ms Davies says Legal & General provide guideline calculators to assist in understanding how underwriters assess reasonable levels of cover and this can be used as guidance when calculating the amount of benefit.
