Critical Illness Protection and Life Cover
Lump sums payable on diagnosis of cancer, stroke, heart attack and a wide range of other conditions, are an increasingly important additional employee retention benefit. This type of cover is normally very cost effective and easy to underwrite when sourced on a group basis.
Your business is important to you.
You’ve worked hard to build it up – and you’ve made it profitable. You’ve got plans for its future. So you take precautions to protect your assets – you secure alternative sources of supply, you back-up your computer data, you insure your premises, stock and equipment. You’re thorough but there may still be one important detail you’ve overlooked.
What if something happens to your most valuable assets? Your people. Your most important employees. You. Your partners. The people on whom the business depends. If you or they were to become critically ill or die, the business might become ill or die too. Turnover might fall. Well, you might think it’s not very likely to happen.
What’s the risk?
1 in 4 healthy men between the ages of 20 and 40 years of age will contract a critical illness before the age of 65. For women the figure is 1 in every 5. Thankfully as a result of advances in medical technology, people these days survive longer, which is when the benefit of Critical Illness Protection is appreciated.
What is Critical Illness Protection?
Critical Illness Protection is designed to pay you the benefit while you are still alive. Sometimes referred to as “Living Assurance”, it pays a capital sum or a tax-free monthly income on diagnosis of a defined critical illness, usually with the proviso that, following diagnosis, the individual survives for at least 21 days.
Typical Critical Illnesses are:
- Loss of sight, hearing or speech
This excellent form of protection is suitable for sole traders, partnerships and public/private companies. While you automatically protect your business against risks such as those to buildings or equipment, the risk to your business through critical illness or the death of you or your employees may actually be much more significant.
The Simple Solution
With the proper protection, your business could survive even the worst crisis. Critical Illness Protection is well suited for protecting the following:
1. Loss of a Key Person
The Risk: Depending on the size of your company, there could be various people whose loss through illness or death could pose a serious threat to profitability: such as the managing directors, the partners, the business owners, the creative designers, and the marketing managers. Without one of these key decision makers, the business could lose its direction, its competitive advantage, or, more seriously, its clients and sales.
The Solution: Take out a Profit Protection Plan. A critical illness and/or life policy taken out by the company on the life of a key person will automatically pay out a lump sum in the event of anything happening to that person. This sum could protect the company against the effect of loss profits. It would also give the business the necessary time and resource to reassess its position – perhaps to reorganise the company, recruit new people, train them, find new clients and/or offset the effects of any loss of sales.
2. Loss of a Shareholder / Partner
The Risk: Companies and partnerships also face indirect dangers. If a shareholder or partner were to become critically ill or die, they or their family might have to sell out in order to realise their share of the business. They might even sell out to the opposition. Alternatively, the family might want to become involved in the business, which could caused another kind of disruption.
The Solution: Take out a Shareholder/Partnership Protection Plan. The main shareholders or partners could take out protection designed to pay out an amount equal to their shareholding should they die or become critically ill. These policies are written under a special business trust with the other shareholders/partners as beneficiaries. The shareholders/partners then create a formal agreement on how this would work in practice. So if one shareholder/partner becomes critically ill, they or their family will have the option to sell their shares to the others – who will have the resources to buy them.