Regularly reviewing business protection policies is crucial in meeting the changing needs of clients, according to research from VitalityLife.
In the study, 48% of companies with cover said it gives them peace of mind, with 32% saying that the protection secures them for the long term.
About 23% believe their cover is good value for money and 20% said business protection insurance doesn’t have high annual payment compared to other business costs. This allows the market to renew the value and need for business protection.
Alternatively, 49% of companies with business protection considered cancelling cover in the past. In order for the benefits to be realised, the value of cover should be reviewed regularly.
Firms had considered cancelling their policy because of the cost of premiums (13%), followed by businesses trying to save money on running costs (9%), money being tight (9%), business changes (9%) and believing cover was no longer needed (7%).
The reason behind firms removing business protection is because they were worried about losing the business (17%) and wanted to ensure the business would continue if anything happened to a key person (14%). They also want to make sure the business would be passed to a specific family member (9%) or management team (8%).
Nearly 13% of firms removed cover after seeing what happened to other unprotected businesses.
Business protection is typically established after advice from a personal financial adviser (12%) or solicitor (11%), or the businesses financial adviser (11%) or solicitor (11%).
VitalityLife managing director, Deepak Jobanputra, said: “Business protection plays an essential part in keeping companies afloat if someone key to the business dies or becomes seriously ill. This research highlights the importance of supporting advisers in the crucial role of advising on and regularly reviewing business protection, to ensure it remains relevant as needs change. Reminding companies of the significance of the cover they have in place and why they bought it in the first place, can help keep valuable cover in place for the long term.”
Moneysworth director, Andrew Wilkinson, added: “In our experience, the businesses with the keenest interest in taking out protection tend to have a key person in their company who has experienced some level of ill health. These are the clients who are aware of the value of cover and that their policy benefits are protected against future health changes that might occur during the term of the policy. However, over time some businesses can forget the feeling that prompted them to take out cover in the first place, particularly if their circumstances have changed and they’re working hard to keep control of costs.
“As the most important people within a business get older and, in turn, any health issues they might have become more serious or they might be diagnosed with new potentially significant health conditions, it can be too late to turn back the clock if cover has been cancelled. As part of a regular review, it’s essential to keep promoting the benefits of protection and highlighting the consequences to the business if a key person or shareholder passed away or became too ill to work, to make sure vital policies stay in force.”