15 Jan 2020
Almost Half of Advisers Neglect Business Protection
While Independent Financial Advisers have seen a rise in corporate clients taking out business protection, 46% of all advisers have not yet taken out cover for their own business.
This figure climbs to 59% when considering IFAs who are sole traders. These statistics have arisen from the findings of recent research conducted by VitalityLife.
VitalityLife has attributed the rise in corporate clients’ demand for business protection to increased awareness and the growing number of SMEs and self-employed individuals.
Business protection usually covers SMEs and consists of life insurance or critical illness plans which can provide a lump sum towards business costs if one of its key people falls critically ill or dies. As VitalityLife’s managing director, Deepak Jobanputra explains:
“Business protection is often neglected by company owners, yet it is vital for people to safeguard against the unexpected loss or illness of a business owner or a key person.”
According to a survey completed by Legal and General last year, 1.5 million small to medium businesses would be at risk of immediate closure should a key figure in the company fall critically ill or pass away.
Roy McLoughlin, associate director at wealth management firm Cavendish Ware, said:
“Advisers will often point out the potential impact on a small business of illness or death, and in many SME adviser firms there is equally a reliance on key advisers in terms of both maintaining and bringing in new clients.
“Those advisers may often be irreplaceable in the event of long-term illness and key person cover is incredibly important for this sector. Most IFA firms are also privately owned and there are important consequences in the event of death of the business owner.”
He also stressed the importance of advice firms having contingency plans in place, citing the potential effects to their customer base:
“If an adviser is unable to work for a significant amount of time, it is possible the practice could lose clients if appropriate processes are not in place.”