What Are The Different Types of Business Protection Insurance?
The main types of business protection are:
- Business loan insurance
- Key personnel insurance
- Shareholder protection insurance
- Relevant life insurance
Business Loan Insurance
This type of cover is a type of life insurance, which insures the business against repaying any loans or borrowing should the owner of the business die. There is also the option of adding critical illness to the cover or combining the two as a package.
The protection applies to the guarantor of the lending, which is usually the owner of the business. It can also cover directors, partners or shareholders who have acted as a guarantor for business lending.
If business loan insurance is claimed against, then the insurance pay out will assist with paying off outstanding debts, and avoid any personal guarantees being called in against remaining guarantors.
Key Personnel Insurance
Key person cover is another type of business life insurance, and helps businesses to cope financially should a core member of staff die.
This can include any employee who is essential to the businesses such as:
- Owners
- Directors
- CEO
- Finance Managers
- Sales representations
- Managerial staff
The insurance pay out in this scenario is used to find and recruit a replacement, or to cover lost income as a result of losing a key member of staff.
Shareholder Protection
Shareholder protection insures the life of the owners or shareholders of a business, and if they die will provide a pay out to the remaining owners.
These funds can be used to purchase the shares from the estate of the deceased shareholder, to ensure that the business can continue to trade with the remaining owners in possession of their proportion of shares.
Relevant Life Insurance
This type of business life insurance covers the employees of small businesses and can be purchased privately by company directors provided they are paid via PAYE.
Relevant life insurance is a type of benefit offered by some employers, whereby the family of the insured person receives a pay out in the event of their death.
