Research from Scottish Widows has revealed that about 2.6 million sole traders in the UK are leaving their businesses vulnerable by not protecting the owner or key person.
With sole traders reliant on one or two people to run the business, four in five (86%) believe their business has at least one person whose loss through death, critical illness or serious accident would severely impact the profitability and survival of the business.
But over four in five (81%) sole traders do not have "key person" insurance to protect against the drop in profit which could occur as a result, or to cover the cost of filling a vacancy.
The provider's Business Protection Report, also found that 77% of sole traders who have a key person in their business do not think their business would survive the loss of that individual, 73% of sole traders do not have a business exit strategy in place for either a planned or unplanned exit, and just 2% of sole traders are covered for the loss of a key person upon death, compared to 15% who have insurance in place for office equipment.
Clive Allison, protection market director at Scottish Widows, said: "Thinking about personal health and the manner in which they wish to leave their hard earned legacy may be the furthest thought from a small business owners mind but it is a vital consideration to protect the future of any business.
"Sole traders are the engine of the UK economy but are often reliant on one or two key people to keep themselves afloat. Our research highlights that without suitable protection in place, a serious illness, disability or death could be the last straw for these vital grass root businesses," he added.
