Income protection and critical illness cover
Running a successful business requires a skillset built on extensive knowledge, capabilities and experience. At the heart of it, you will find organisation, great leadership and hiring the right people to help drive the business forward.
Success is recognised when the hard work has paid off and the business is finally thriving. But, how would your business survive if you or a key employee were ill for an extended period of time due to an injury or illness?
What is income protection and critical illness cover?
Income protection and critical illness cover addresses the threat of being made redundant or unable to work due to illness or accident. It provides a regular income for a chosen period of time without an income.
When might you use this cover?
Whilst many businesses put into place life cover on key individuals protecting against the impact of prolonged absence is less often considered. In most businesses, there are a handful of employees who are crucial to the future success of a company and, typically, they are among the highest earning of the workforce and receive the most generous benefits packages.
Should you, or they, be unable to work for a prolonged period of time this could be extremely detrimental to both the short term cashflow and long term success of the business. Additionally, you will want to be in a position to take care of these key individuals, or be able to continue to draw an income yourself until a full return to health.
How do income protection plans work?
An income protection plan pays a regular income during a period of absence and, depending on the type of plan you take out, cover can include dividends, commission, bonuses, overtime and pension contributions. You cannot insure 100% of the income but this regular inflow could be valuable to your short term cashflow needs, either individually, as a business owner or for your employee.
What is a critical illness policy?
Whereas income protection pays a monthly income, critical illness policies are designed to pay out a capital sum on the diagnosis of a specified critical illness such as heart attack or cancer. Income protection and critical illness cover should not be regarded as ‘either/or’, but rather as complementary.
It would be quite feasible to be claiming on one without being able to claim on the other at the same time as these policies do not pay out for the same illnesses. Protecting your company against the financial risk of losing a key employee temporarily or permanently should have a high priority in running your business.
If you would like to know more about protecting your business from the impact of illness please get in touch and arrange a free consultation with an adviser who will be able to help you.