Chris Atkinson, head of proposition innovation at Zurich added “many advisers are well versed in the key areas of businesses protection, however one group that continues to be overlooked are sole traders. While the effects of ill health or a death may well be far more dramatic on a sole trader and their dependants, many advisers fail to engage and fully explore their needs.”
Auto enrolment is also providing the biggest open door in years for advisers talk to businesses about protection. The problem used to be about getting in front of the decision maker, but now that they have to engage with auto-enrolment the case for protection can be made at the same time.
Assessing cover amounts
Being able to structure the amount of cover a business needs is obviously a fundamental part of business protection planning, but it can be a complex process. Mr McLoughlin recommends using the services provided by insurers: “Assessing the sum assured for business protection is difficult. It’s hard to define someone’s replacement value.
“There are different levels for different industries so it can be complex. Insurers have helplines to provide assistance with indicative pricing but also conceptual things, and how to read a balance sheet if it isn’t something familiar to you” he said.
Mr McLoughlin continued: One of the biggest issues is how you value a company, and that’s where it makes sense to work with accountants and lawyers. If you set up a cross option or double option (with shareholder protection) you have to have a lawyer present anyway, so it’s a great time to foster connections that can make good long-term business partnerships.”
“Business protection can be slightly more complex than personal cover” believes Chris McNab, Protection Product Manager at LV=, “so it’s worth thinking about how advisers can make it as simple as possible for business owners. Before meeting with clients, advisers should ensure they understand the different legal business structures, as this will influence how they write any policies.”
Chris Atkinson, head of proposition innovation at Zurich added: “When advising businesses the devil is in the detail, and advisers should always review the Articles of Association or Partnership Agreement before recommending any solutions. Failure to review these vital documents may mean inappropriate recommendations are made.”
Prioritising needs
Many businesses won’t be able to afford every type of protection to cover all bases, so advisers need to work with them to prioritise cover.
As with the individual market, most people focus on what would happen in the case of someone dying, when it is much more likely for people to be unable to work through accident or illness. So it’s important to consider critical illness and income protection options alongside life cover.
