The failure of business owners to take out business protection insurance endangers their firm, the livelihood of other employees, their suppliers and their customers.
This is according to Brian Hall, chairman of the world trade group at the Institute of Directors, who spoke to Health & Protection in the wake of research from Vitality which revealed more than a third of business owners admit to having no protection in place for their firm in the event they or a key member of staff dies or suffers a severe illness.
The research found around two fifths (43%) revealed that they do not have any form of personal cover such as income protection or serious illness (critical illness).
It also found that for three in five (60%) business owners surveyed, their business is their main source of income, and for three in ten (30%), it is their only source.
Commenting on the findings, Hall told Health & Protection the idea that “it will never happen to me” or “we can’t afford it” when it comes to business protection simply is not true.
“It would be good to get a reality check questionnaire for owner directors that opens with the question: Are you an asset to your business? Because if you are then that asset should be insured,” he added.
“It is not untypical, even in successful businesses for owner directors to effectively subsidise their business, taking out less than they would have to pay someone else to do their job. This is a fatal weakness for the business – should they fall Ill the business can not afford to properly replace their endeavour, let alone support their ill health in addition.”
Hall contends this mindset is often the result of self-kidology.
“‘I only take what I need to’ when in many cases the owner being underpaid in a profitable business is really masking a loss making business at proper market rates,” he continued.
“Business owners and their stakeholders must ensure that proper insurance is in place to fund the missing business owner/their estate and fund the replacement endeavour. Failing to do so endangers the livelihood of other employees, their suppliers and their customers. Especially when the cover is cheaper than they expect.”