The business protection market offers untold opportunities for IFAs, says Heather Armstrong
Several surveys carried out in recent months have demonstrated just how small a proportion of the UK's businesses have put appropriate insurance in place to safeguard their companies against the unexpected.
A survey published by the CBI earlier in 2002 suggests that an absence through sickness costs British industry an estimated £14 billion per year. It estimates that 27,000 people leave work each year as a result of injury or ill health, never to return to the working population.
The CBI has identified long term absence as a major concern to industry. Government statistics suggest that 60% of those employees who are off work due to illness for more than five weeks do not return to work.
What would the impact on a small business be, for example if this happened to one of the partners, or a core member of staff? Early exits from employment can mean a loss of valuable experience, skills, expertise, and often contacts, or clients, to a firm. IFAs can point businesses towards ways of insuring the company against these risks.
It's worth remembering too that, although businesses may already have an element of business protection in place, it may not be comprehensive enough to cover all eventualities. For example, people are 2.5 times more likely to suffer a critical ililness before age 60 than they are to die. Although some firms may have life cover in place, have they thought about extending this to critical illness cover or income protection? Here again an IFAs insight and expertise can be crucial.
Why is it that so many IFAs have hitherto been reluctant to make the most of this market? Reasons why not for IFAs in the past may have included the complexity of the business protection market, combined with the rigid underwriting approaches adopted by many life offices. The good news is that this type of characteristic is a thing of the past in terms of both product and underwriting approach.
Like people, no two businesses are the same. Each business is likely to require a different type of protection package to protect itself and its core members of staff. For this reason, the new breed of menu products, specially designed for the needs of the business protection market, provide the flexibility IFAs need to create a tailored package for each business client.
The choice of product and provider is likely to affect the degree of flexibility which the provider can offer. The adviser should highlight to the corporate client the value of safeguarding the business with appropriate protection. The corporate protection market is an area which IFAs cannot afford to ignore when planning their own future business strategy.IFAonline
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