It’s a common misconception that a company can be too small to be covered by business income protection, but advisers should watch out for temporary firms.
This is according to Roy Mcloughlin, strategic partnerships consultant at Omny Benefits, who was speaking on the second day of Income Protection Action Week.
“The one that I hear all the time is I’ve got a company that is too small for group income protection insurance,” Mcloughlin said.
“We’ve just said, it can go down as low as two.”
Mcloughlin added the other misconception is connected to tax and pay outs and underwriting.
“I would implore your listeners to go and explore this and they will be pleasantly surprised,” he continued.
“Because when someone has done group income protection for a while, they’ll often say, there’s not much difference between this and individual income protection. And actually there isn’t.
“And group income protection does have some advantages, so it’s the same product basically within a group.”
Temporary firms
However, Mcloughlin added that advisers also need to be aware of companies of a very temporary nature or where they are part of a portfolio of businesses.
“Do remember the one slight disadvantage of group is that if the business has to stop trading, the group policy has to stop,” he continued.
“The advantage of the individual policy is you can change jobs the proverbial 52 times. The individual policy just goes with you, so sometimes there is that element.”
Talk to the customer
In these situations, Mcloughlin maintained it was really important to talk to the customer about what their business is, what its longitude is, what it is doing, if they have plans to sell and when this could happen.
“And even when someone tends to sell, you have a traditional two or three year tie in from when you sell and arguably you still need income protection then,” Mcloughlin continued.
“Just because someone has come in and bought you, that isn’t the end of income protection.
“So it’s important to explore those themes and very importantly, work with the professional bodies within that person’s sphere and the main one is accountants.”