How can business protection add value to the services you offer?
As the owner of a small company, business protection has been on my mind quite a lot lately.
After transitioning from a limited company to an LLP we recently went through the process of putting protection in place for the new business and its directors - and it proved far from straightforward.
Assessing the risks a business could face, alongside putting a value on key members of staff and the business overall can be a difficult and sensitive task for advisers.
Earlier this year I wrote a CPD piece about how to write business protection focussing on the different products available, such as key person cover, shareholder protection and relevant life cover, and what to be aware of when assessing a businesses need for protection.
In this follow-up piece, we take a look at what’s available from insurers to aid advisers when selling business protection, including the most useful websites, tools, calculators and guides.
Growing your business
Business protection can be a good growth area of business for advisers. Many clients who come to advisers with individual needs may also be business owners or partners, so it’s a natural extension of the services advisers can offer to existing clients.
Stephen Crosbie, protection director at Aegon agrees: “One of the main reasons advisers aren’t writing more business protection is inertia. But in today’s economic climate, it makes sense to embrace new income streams and grasp every opportunity to grow your business.”
Roy McLoughlin at Master Adviser believes there’s currently a big opportunity for advisers in offering business protection to more clients.
He says: “Many advisers will be focussed on pensions auto enrolment, a particular issue for small to medium-sized enterprises, so it’s the perfect opportunity to talk to these clients about business protection. Succession planning is very important to businesses so the opportunity to discuss it shouldn’t be wasted.”
Stephen Crosbie at Aegon adds: “Many people (including advisers) have preconceptions about business protection, thinking it’s complicated and time-consuming. However, it’s not all about underwriting multi-million pound cases.
“The majority of small- to medium-sized enterprises won’t need large sums assured. A modest injection of cash could make the difference between the business failing, and buying the time to recruit a replacement for a key worker.”
Research by insurer LV= shows just 11 per cent of small and medium sized businesses (SMEs) have business protection in place, but a further 24 per cent are interested in finding out about it.
The main reasons for not having protection in place were not feeling it’s relevant for the business or seeing the need for it, because it isn’t mandatory, thinking it’s too expensive and not knowing enough about it.