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If you’re self-employed, or thinking of moving into self-employment, then it’s usually strongly recommended to look at finding private equivalents of the sort of insurance packages which are often offered as part of employee benefits packages.  If you are planning on starting your own business (as opposed to providing services on a freelance basis), then you may well wish to look at expanding your protection to cover your business itself.  Here are three types of policy you may wish to consider.

Key Person Insurance

Very few people are completely irreplaceable, but some people are so valuable to a business that their death or unavailability for any other reason (such as illness) would cause the company serious problems.  Where a business has both limited staff and limited budget, the consequences of losing a key member of the team can be absolutely catastrophic.  Fortunately, key person insurance can help to mitigate against this risk.  While it may be a morbid exercise, thinking seriously about how your business would be impacted by the unexpected departure of one of your co-workers (even if only temporarily) is the first step towards being ready to manage the situation.  In addition to thinking about how much money you would need to plug the gap they leave, you could take this as an opportunity to look at ways to cushion the blow of their absence, such as having them prepare training documentation for a successor and looking a knowledge management, systems and processes.

Business Loan Protection

This is basically payment protection insurance for businesses and while PPI has had a very bad press in the consumer sector, it’s worth underlining that the issue was one of PPI being missold rather than one of PPI being a bad product in and of itself.  Like many other financial products, PPI is an appropriate purchase for some people and an inappropriate product for others.  Business loan protection, as its name suggests, is designed for use by businesses and can be used to protect loan payments (and therefore, indirectly credit ratings), in the event of the death of a business owner, some policies also pay out if a business owner becomes critically ill.

Share Protection Insurance

From a legal perspective, shares are assets much like any other and as such the owner of the shares has to decide what is to be done with this asset in the event of their death.  One option is to have the surviving business owner(s) buy the shares from the deceased’s heir, thereby keeping control of the business with the existing business owners, making the shares available to any successor and giving the beneficiary of the will money to use as they please.  Share protection insurance can provide the means to do this, thereby avoiding the need to use (tight) cash resources or take out a business (or personal) loan, assuming the latter is even possible.  Some SPI policies will even pay out upon critical illness, thereby allowing the individual to cede control of the business gracefully and receive funds they can put towards their recovery.

Other forms of protection

Whatever line of business you’re in, remember to check that you have appropriate insurance cover for the risks you face.  One obvious example of this is public liability cover, which may actually be mandatory, depending on your business area.  Even if public liability insurance is not obligatory in your situation, it may be worth remembering that “public” in this context basically means any third parties who enter your place of business, so even if your premises are not actually open to the general public, you may still benefit from public liability insurance.

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