Less than half of SMEs have adequate life cover

12% admit they would have to cease trading immediately while a further 26% warn that their business would only be able to limp on for less than a year before it would have to close. Less than half (43%) of the 500 business owners surveyed by Legal & General have any kind of life cover in place for a key person and almost 3 in 4 business owners aged under 40 do not have any life insurance cover at all.

The survey also revealed that 44% of business owners would turn to their financial adviser first for help in mitigating that risk. A further 15% would speak to their accountant, 13% a networking group, 9% would approach an insurer directly and 8% would ask friends of colleagues for guidance.

The findings follow Legal & General’s recent tie up with Asset TV and Akademia to offer advisers free CII accredited training videos. Asset TV has created an industry standard online CPD channel to help advisers meet the business protection needs of their clients. The next video is now live and is entitled  “Understanding Key Person Protection”.

Richard Kateley, Head of Specialist Protection at Legal & General says:

“Napoleon claimed Britain was a nation of shopkeepers and he wasn’t far wrong, not shop keepers maybe but SME’s - 99% of the UK’s 4.9million businesses are made up of SMEs of less than 50 people. Many of these firms would not have the depth of human capital to sustain themselves after the loss of a key person to death or critical illness.  These risks are magnified the smaller the firm is and when you consider around 98% have less than 10 employees you can begin to see the size of the issue and the urgency for these firms to get some financial advice. Our survey shows that the risks are real and that many business owners would prefer to learn about business protection and how to mitigate the potential risks through a financial adviser. There is a clear opportunity here for those advisers that position themselves appropriately to help SMEs prepare via this kind of specialist protection.”

“Our series of videos with Akademia and Asset TV are designed to help inform advisers about the details of the products available and encourage best practice. The content is approved and accredited by the IFS, PMI and CII and when accompanied by a reflective statement it can be counted towards the structured element of an adviser’s CPD requirements.”