Small- to medium-sized businesses continue to fail to protect their most important assets according...
Small- to medium-sized businesses continue to fail to protect their most important assets according to new research from Legal & General.
While the companies recognised their staff are their most important asset, businesses are neglecting to insure against the financial consequences of death and serious illness with key person protection.
Commenting on the findings, Ronnie Martin, protection director at Legal & General, said: "We wanted to learn more about businesses' attitudes to protection and their awareness of it. We found that 99% of businesses rated their staff as the most important aspect of their business. This was followed by brand, ideas and products, but these all stem from people."
The research also revealed that all businesses have at least one employee whose absence either through death or long-term illness would impact on their profits. Meanwhile, 64% had two or more employees falling into this category.
More worrying was the extent of the damage an absence could cause. Martin said: "57% of businesses said that if they lost a key person the business would survive no longer than six months."
This gives IFAs an excellent opportunity to tap into an under-served market. However, research has found there remains a great deal of confusion in this area and IFAs need to clarify what key person protection actually does for the business.
Martin said: "There is still a lot of confusion about key person protection among businesses. One of the businesses questioned said it was there in case a company director or key person sued the business."
The research also suggested that many businesses believed protection was expensive. Some companies surveyed thought protection would cost double the actual cost.
In response to the research, Legal & General is issuing a new pack to support IFAs wishing to sell more business protection.
