In 2020 we’ll have been in business for 20 years! To celebrate, each month we’re sharing 20 top tips about topics that are closest to our heart. Our aim is always to provide you with the best possible information so you can make informed financial decisions. This month we’re talking about insurance and the reasons why you need both personal and business protection.
20 Reasons Why You Need Protection
No-one wants to pay for insurance, but we all have a responsibility to make sure we, our families, and our estate are protected. If you own a business, you should also have protection in case you, one of your partners, shareholders or key employees were to die or were unable to work because of a serious illness.
In this article, we’ll outline 20 reasons why you need individual and business insurance. First, why do you need individual protection?
1. A life insurance plan will protect the people who are dependent on your income if you pass away. The sum they receive can be used to repay debts, provide your family with an income or provide a legacy for their future. We can help you calculate how much money your dependents would need if you died and help you plan a capital sum to provide for your family without incurring any unnecessary inheritance tax.
2. A critical illness plan will provide a lump sum if you survive a qualifying serious illness for a minimum period. Advances in medicine thankfully mean more people recover from critical illnesses, but their lives often change profoundly afterwards – for example, they may not be able to work, may have to move to a new house or they may need to replace the income they lost when they were ill.
3. Income protection provides the reassurance that you will receive a monthly payment so you can pay your bills and maintain your lifestyle if you can’t work due to sickness or injury. We can help by reviewing your existing provision from private policies or employment benefits and arrange the most appropriate plan within your budget if required.
4. Accident protection provides a tax-free lump sum if you have an accidental injury.
5. Buildings and contents insurance protects your home and belongings in case of fire, theft, loss or accidental damage. We can arrange a quotation for you, advise about different levels of cover and provide information about protecting your valuables outside the home.
6. If you rent out properties, landlords’ insurance can provide protection for your building and contents.
7. Landlord’s insurance will also provide a lump-sum if your tenants don’t pay their rent and if your property is left empty during a claim.
8. Private client’s insurance is for high net-worth clients. We can arrange one bespoke insurance policy to cover all your general insurance needs. This might be building and contents insurance for several properties, for example, plus cars and even boats or a plane.
9. Private medical insurance gives you the reassurance that you will receive assistance if you need access to private medical care for yourself or your family following accident or illness.
10. We can help you arrange individual protection by gaining a clear understanding of your background and circumstances, which enables us to recommend custom-designed solutions that suit your needs.
11. If you are a business owner and you pass away or are unable to work for an extended period, it could seriously affect the revenue of your business. This could affect your business’s profits, ability to pay debts and meet ongoing costs. It could result in the loss of clients, and loss of confidence from suppliers and lenders.
12. This could seriously affect your dependents if they rely on your income.
13. These problems can usually be avoided if you have the right insurance, but you need advice about setting up policies depending on the sort of business you have.
14. We can help you get the most appropriate insurance depending on the sum insured, the terms of cover, your age, and health.
15. If you have a team and any of your key employees were no longer able to work due to death or serious injury, it could affect your business revenue and profitability
16. If you are a shareholder or a partner in a business, you should make arrangements in case one of you were to pass away. If you don’t, your business will be subject to inheritance law, which could mean your partners can’t carry on trading and your family might not receive compensation.
17. Life policies for each business owner would result in a tax-free lump sum to be paid out if one of them were to pass away, which could be used to buy and run the business. This means the other partners could continue to run the business and …
18. … the family of the deceased would receive the proceeds of the sale.
19. Even if the business is to pass to a family member without payment, there might still be a need to have life insurance held in trust to compensate other members of the family.
20. And if the business is to pass to other partners without payment, life insurance in trust is usually required to compensate the family.
No-one wants to think about what might happen if they were to pass away, have a serious injury or accident, or if their property was damaged through loss, theft or fire, but taking some time to make arrangements now will protect your family, estate and business if the worst happens. Contact us for more information tailored to your circumstances.
DipFPC, CertCII(MP and ER).
Practice Partner and Financial Planning Consultant
Downton and Ali Associates
Dartford Business Park