Many business owners are not aware that business protection exists so far as shareholder protection, partnership protection, and keyman insurance are concerned.  It is often the case that once the business understands how these products can help the business survive through the worst times , it tends to make sense.  First of all people tend to see the logic in life assurance as it is a dead cert.  Statistically we know that we are going to die!  It’s simple and is an understandable insurance policy.

What about critical illness insurance?  Does this fit into a business protection plan?  The answer is yes and perhaps it makes more sense than the life assurance requirement.  We all know we are going  to die but how many people die prematurely, ie, before old age and natural causes?  Statistically critical illness is far more likely to happen during our working lives.  Cancer Research UK states that we all have a 1 in 3 chance of being diagnosed with some form of cancer in our lifetimes so surely this is something worth insuring against?  You only have to look at some of the statistics to see that critical illness insurance does have a place in business protection insurance planning.

In the UK, one in three people develop cancer in their lives and one in four will die from it. In total in 2004, 152857 people died from from cancer in the UK. There are 289000 new cases of cancer diagnosed each year.
Source - National statistics online and cancer research website 2006.

In the UK, the lifetime risk for breast cancer in women is one in nine. In 2005 45500 women were diagnosed with breast cancer.
Source - Cancer research website 2006

In 2005 in the UK, 1 in 5 men and 1 in 6 women died from heart disease
Source - British Heart Foundation

Someone has a heart attack in the UK every 2 minutes and almost 2.6 million people have heart and circulatory disease.
Source - British Heart Foundation.

In the UK one person has a stroke every five minutes
Source - The Stroke Association website.

Every year, at least one in 13 deaths in the European Union is likely to be related to excess weight.
Source - Infant and Dietetic Foods Association.

Over 1.65 million people will be off work due to illness each year for 6 months or more

Around 120,000 people have Parkinson’s Disease and 1 in 7 are under 40 when diagnosed.

Coronary Heart Disease is responsible for 12% of all working days lost through sickness.

There are now over 700,000 people with dementia. By the year 2010 if the current trend continues this figure is expected to reach 850,000

Approximately 8,500 people in the UK suffer a Brain Haemorrhage each year, with 3 or 4 out of 10 patients being left with long-term problems

Around 350,000 people have rheumatoid arthritis.
(Arthritis Research Campaign, 2002)

There are currently approximately 85,000 people with MS. Each year, around 2,500 individuals are newly diagnosed. MS is the most common neurological disorder among young adults. People are usually diagnosed between the ages of 20 and 40, but can be older. (Multiple Sclerosis Society, 2002)

Business Protection is a growing market in the UK and it needs to grow.  Currently, Business Protection insurance is the most overlooked insurance many businesses have.  So why should you consider Business Protection Insurance?

• There are over 4.3 million businesses in the UK each with their own specific financial needs, most of which have not addressed those needs
• 2.2 million people of working age will be off work for 6 months or more at any one time through illness or disability. 
• It is estimated that the current protection gap is £2.3 trillion
• At the start of 2004 24% of businesses were limited companies, 13% partnerships, 1% limited liability partnerships and 62% were sole traders. Each of these has a different protection need.

According to Gordon Brown he said, ” Britain has only one truly national resource - the talent and potential of its people.”  This is true to say but when more than 95% of Businesses have no form of Business Protection insurance in place it shows that those businesses have no idea of just how much their staff mean to them.  In most cases,  without people, the business is nothing.  Is this what your business would be?

It is a well known fact that Business Protection is a heavily under-valued insurance in the UK business market.  There are around 4.7 million private sector businesses in the UK, 99.9% of which are SMEs, which AEGON believes represents a potential market of around £500m.

Within the Business Protection market there are different types of insurance needs but a lot of companies don’t actually realise that they have these needs.  The larger insurance companies have now focused their attention on Business Protection and are running adviser workshops up and down the country in an effort to show advisers how their clients could benefit from Business Protection.  One of the main types of Business Protection is Keyman Insurance.  Keyman Insurance is a popular product in America where 25% of companies have Keyman Insurance in place.  In the UK less than 5% of companies have Keyman Insurance in place.  This can only be down to a lack of awareness of the insurance coupled with a lack of adviser understanding of the product.

Business Protection has always been seen by many advisers as a complex product where specialist knowledge of corporate tax is needed.  True, there are some tax issues but many of the insurance companies offer guidance on this.   The main point is that there is a need for Keyman Insurance and tax should not prevent advisers recommending this product to their clients nor should it prevent companies from protecting their key individuals.

The roadshows will help advisers to understand this product range and thus SME’s will benefit from this advice in the coming years.  Business Protection is set to grow as a market and before long it will be part of the business plan rather than an after thought.