Shareholder Protection. In 2018, 43 per cent of limited companies said that they had not reviewed their Articles of Association since starting the business and had no instructions/special arrangements in their Will around the succession of their business. Moreover, 15 per cent stated that in the event a shareholder died, their beneficiary would play an active role in the business.
How can our propositions be tailored to accommodate the planning needs of business owners?
2020 saw a protection overhaul, with providers adapting their products to coincide with the ever-changing ecosystem of the industry, the economy, and client needs.
So, which factors should protection propositions consider when selecting a preferred panel for business protection? Several factors – which are constantly under review.
For example, premium changes; underwriting times; non-medical limits; which agency is used to conduct medicals; immediate/free cover (beware of the difference, their limits, exclusions, and duration); benefit guarantee amounts; service levels; claim payout rates; financial evidence requirements; premium holiday policies; guaranteed insurability options; and value-added benefits to name but a few.
Immediate and free cover play an important role in ensuring a key person’s life is covered at the earliest opportunity and should not be overlooked when analysing the protection market.
Firstly, note the difference between the two; immediate cover covers the life assured based on the information provided in the application form while medical evidence is sought.
Free cover is temporary cover that comes into play before a policy is in force and is free from underwriting. AIG, LV=, Zurich, Royal London, Aviva, and Scottish Widows all offer a form of immediate or free cover, with Royal London offering both.
All providers will present varying underwriting cover limits, durations and exclusions so be mindful to compare these when considering a whole of market review.
Financial evidence requests are applicable when looking at key person cover, shareholder protection and business loan protection and may involve proof of earnings, proof of a loan, or a financial questionnaire.
Again, understanding financial underwriting limits can help to streamline the process for all parties. AIG, Aviva, and Zurich allow the questionnaire to be conducted over the phone, cutting out the turnaround time.
Zurich, LV=, AIG, Scottish Widows and Royal London all tend to have the highest sum assured limits of circa £3.5m to £4m before which proof of loan documentation is required.
Insurers are constantly tweaking and updating their menu plans. One recent enhancement to Royal London’s Business Protection Menu was the Children’s Critical Illness Cover Buy-Back which combines business protection with a form of intergenerational planning.
