Group Business Protection – A win for you and your clients
We answer the 5 most commonly asked questions by brokers when selling this convenient, cost-effective insurance product
Most businesses don’t think twice about insuring themselves against immediately tangible losses like theft, fire or liability. But what about protection against the negative financial impact as a result of the death of a key businessperson or shareholder?
That seems to be a risk that many businesses don’t insure against. In fact, according to a survey of small businesses conducted by the National Association of Insurance Commissioners1, 71% of small businesses surveyed indicated that they were very dependent on one or two key people for their success, but only 22% of the respondents took out key person insurance.
Through our UK Group Life division, we offer numerous Group Business Protection services, including:
- Key Person Insurance
- Shareholder Protection
- Director’s Loans
- Business Protection
- Partnership Protection
- Equity Partner Protection
At The Unisure Group, we sell our products through brokers, intermediaries and independent financial advisors (IFAs), many of whom are used to selling these types of products through individual (not Group) policies. Our offering is quite niche in the UK, so we asked Kelly Allen, Unisure UK Group Life Business Development Underwriter, to answer five of the most commonly asked broker questions:
1. Why would my client need Group Business Protection?
Legal and General’s State of the Nation Report 20212 surveyed over 500 small UK businesses. The results of their survey present a very compelling argument for the need for business protection. Take a look at these talking points:
- 60% of UK SME businesses would cease trading within 12 months of losing a key person
- 33% of newer businesses would cease to trade immediately if they lost a key person
- 53% say COVID- 19 has had a negative impact, and more than half say COVID-19 has made them more likely to consider protection
- 75% have some form of business debt
2. What are the advantages of offering my client Key Person Insurance as a Group policy (rather than an individual policy)?
“There are numerous advantages,” Kelly explains. “Firstly, with a Group policy, there is no end date. It’s a renewable policy, and it’s much more cost effective because it’s unit rated.”
“In a lot of cases, your client has a free cover limit, which means that anybody who has a benefit below a certain amount wouldn’t need any medical underwriting. That’s a lot less hassle for a client, especially when you are looking at large groups of shareholders or equity holders, which would otherwise require processing multiple individual policies.”
Another advantage of a renewable Group policy is that there’s no risk of a person reaching the end of their term and then needing to apply for a new policy, possibly at a time when they’re older, and carrying additional health risks, which would require new medical underwriting.
Lastly, Kelly explains that with an individual policy, if a person left the company and the company had paid commission on an indemnity basis, they might face commission clawback. With a Group policy, you wouldn’t have that risk of clawback, unless the whole Group cancelled mid-term.
All in all, for you as a broker, intermediary or IFA, processing business protection as a Group policy is much more streamlined, simple, and cost effective for your client.
3. How does tax work with Group Business Protection?
This is a simple insurance vehicle. Benefits are paid into the corporate entity bank account and are taxed as a trading expense into the company.
4. What is the commission structure?
A non-indemnity commission is payable (up to 40% of the premium).
5. What are your turnaround times for quotes?
“At Unisure, we pride ourselves on our personal service,” says Kelly. “You’re not dealing with an anonymous administration centre, you’re dealing directly with our underwriters. In most instances, we’re returning quotes on the same day, or within 48 hours.”
As the stats above reveal, SMEs in the UK are going into 2022 facing numerous challenges and risks. While offering Group Business Protection as a Group policy might not be something you’re regularly offering your clients, the ease of the product and its cost efficiency make it a very attractive offering.
If you’d like to know more about how The Unisure Group’s UK Life division can help your clients, visit our webpage or get in touch:
Kelly Allen
Business Development Underwriter
kelly@unisuregroup.com / +44 781 606 5967
Lewis Twist
UK Group Life Underwriter
Sources:
- Corporate Finance Institute, National Association of Insurance Commissioners survey.
- Legal and General, State of the Nation Report 2021.
- Kelly Allen, Unisure Group Business Development Underwriter, Interview, 27 October 2021.