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Insurance

What Insurance Do I Need For My New Business?

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Every business owner needs some form of insurance. Think of insurance policies as safety nets that you can land on if you slip off the business ladder. There’s a lot that can go wrong when running your company and the recovery could cost you a fortune. Everything from theft to a lawsuit is a possibility that you may need to consider. With the right insurance policy in place, you can soften the blow of any financial issue.

You also need to understand that some forms of insurance are not optional. Small businesses are legally required to have certain insurance policies in place to protect the business, their employees, and the general public. Here are some of the insurance policies that you need to have in place before your new company opens on the market.

General Liability

General liability protects you if your business injures another individual or causes damage to property. With general liability, you can make sure you are covered with a defense and if you need to pay damages. As such, it is crucial for any and all business owners, whether working from home, a factory or in an office. There are lots of instances where general liability insurance could come into play. For instance, a member of the general public might be injured on your property due to tripping over a wire in your office. If this occurs, the insurance may help you pay for any legal costs or compensation.

Worker’s Compensation

Excluding Texas, all states require business owners to have workers compensation insurance in place if they have more than five employees. This form of insurance provides compensation to workers who are injured on the job, at work, usually on the property. In some states, it is possible for workers to claim on injuries that they suffered from while away from the business property within business hours. The insurance can be used for anything from paying medical bills to covering lost wages. By having worker’s compensation, business owners can avoid the possibility of injured employees suing for damages due to an injury. Penalties for not having the right workers compensation in place are costly and should be avoided.

Professional Liability

Any business that offers services to clients or customers will need to consider getting professional liability insurance. This protects a company in the event of errors or negligence while offering a service. For instance, doctors have this insurance to in case they are sued for malpractice. It is useful for a wide range of companies from hair salons to law firms.

Product Liability

Product liability relates specifically to products being sold by your business. If you sell products, this will protect you if the product in question is argued to be defective or causes injury to customers. For instance, in the past, there have been toy firms that have been sued for using lead paint on their products. With product liability, these firms were able to avoid expensive legal costs.

Data Breach

Business owners often hold a lot of sensitive data about clients and customers. Usually, if a hack does occur in your business, customers will be the targets rather than your company. As such, it is important to protect yourself from the cost of losing sensitive data. With data breach insurance you will be covered for any legal damages related to this issue. It is important to realize that this insurance protects a business whether the data was lost electronically or through a paper file.

Property Insurance

Property insurance will protect your business from any damage to your property or any items inside it. For instance, it ensures that you are covered if computer hardware is stolen from your office. Or, if a fire destroys part of your building. It is also possible to increase the insurance policy to ensure that loss of earnings are protected if your business is not able to function due to the damage that has occurred.

Commercial Auto Insurance

You might want to think about personal automobile insurance if you are using a fleet of vehicles for your company. This is going to be particularly important for any business that has transportation as a major part of their business model. For instance, a logistics business owner should make this insurance a top priority. It protects you from bodily injury, physical damage and liability in the event of an accident on the road involving a car your company owns.

Homeowner’s Insurance

If you are running your business from home, homeowner’s insurance is going to come into play. This will protect you from the loss or damage of any property in your home. It can also ensure that you are covered if any injury occurs in your home or an accident that you may have caused.

Renters Insurance

Renters insurance is specifically for business owners who are renting their home or their property. Similar to homeowner’s insurance it protects the renter in the event or property damage, a personal injury or damage to the property itself.

Life Insurance

It’s possible that your business is going to have the potential to make you a lot of money in the future. If you passed away, you would want to make sure that your loved ones still benefited from the potential earnings of your company. With a life insurance policy, the insurance company pays out a certain amount of money to your beneficiaries. This amount is based on how much you would have expected to make if you had lived a full life. As such, it can give new business owners peace of mind and guarantee that the potential for their business earnings are protected.

Personal Umbrella Insurance

Finally, you should consider looking into personal umbrella insurance. This gives you an extra level of protection from legal claims, property damage and any other financial loss that you might incur. Often, this form of insurance is sought out when all other forms of coverage have been used. As such, it is commonly used by larger corporates and bigger businesses. You probably won’t need it straight out of the gate.

Additional Resources

5 Key areas to look into when looking into business insurance
25 Expert Insurance Tips When Starting a Business
Business insurance when you’re self employed

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Insurance

Life Insurance Jargon Buster

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Researching life insurance is fraught with terminology you need to understand before you consider any type of policy.

In this article life insurance providers Reassured have demystified many of the key terms you’ll come across and we encourage you to reference this glossary as often as you need to so you’re fully informed before choosing this type of finance product.

Life insurance

Life insurance is a type of policy that pays out a cash lump sum to loved ones if the policyholder passes away during the term of the policy.

The policyholder will pay the insurer a monthly premium throughout the term to secure cover.

Level term life insurance

This type of life insurance policy will pay a fixed cash lump sum to loved ones if the policyholder passes away during a specified term length.

Decreasing term

This type of life insurance policy will pay a cash lump sum to loved ones when the policyholder passes away during a specified term length, however the value of the sum assured (pay out sum) will decrease during the term.

Whole of life

A whole of life insurance policy provides protection for the whole of your life and guarantees to pay out a cash lump sum to loved ones when the policyholder passes away.

Over 50s life insurance

An over 50 life insurance policy, also known as an over 50s plan, that guarantees acceptance for people aged over 50 (and younger than 85) and offers a guaranteed pay out to your loved ones when you pass away.

This type of policy does not require applicants to disclose any medical information to the insurer.

Family income benefit

This type of policy provides your loved ones with a regular, fixed, tax free income for a set period of time after you pass away.

Joint life insurance

Also known as life insurance for couples, joint life insurance is when a term or whole of life policy is taken out for two people that covers them simultaneously.

The pay out is made upon the first death and the policy ends.

Critical illness cover

Critical illness cover (sometimes referred to as critical illness insurance) provides a tax-free lump sum pay out if you are diagnosed with a specified life-changing (but not terminal) illness, covered by your policy.

At Reassured, this can be taken out as an add on to a life insurance policy or as a standalone product.

Terminal illness cover

This type of cover usually comes as standard with any life insurance policy, at no additional cost.

It allows you to make an early claim on your policy if you’re diagnosed with a terminal illness and predicted to pass away within 12 months.

Impaired life insurance

An impaired risk applicant is identified by an insurer as a high-risk applicant who is more likely to make a claim on their life insurance policy.

Those who may be considered impaired may have pre-existing medical conditions, a dangerous job or hobby or have a particular lifestyle choice affecting their health, such as a smoker.

Funeral plan

A prepaid funeral plan allows you to pay for and arrange your own funeral in advance, so your loved ones don’t have to.

You pay either by lump sum or by monthly payments to a funeral plan provider. You are able to secure the cost of a funeral today, avoiding the rising cost of funerals.

Life insurance policy

A policy is a legal contract between a policy holder and an insurance provider in which states the terms, conditions and details of the agreement.

Policy holder

The written name of the person in which the life insurance policy protects.

Sum assured

The guaranteed pay out amount from an insurance policy. The sum assured (or cover amount) is calculated at the beginning of the policy.

Premiums

A sum paid monthly by the policyholder to remain covered by the life insurance policy.

Guaranteed premiums

A guaranteed premium remains fixed throughout the life insurance policy, (or until you pass away in the case of whole of life)

Reviewable premiums

A reviewable premium is reviewed by the insurer at regular intervals and the rate can be increased.

Underwriting

The underwriter of a life insurance provider will calculate the cost of life insurance premiums by using statistical analysis and mathematical equations based on the information the applicant provides.

Non-Disclosure

This means failing to provide the insurance company with all the correct information regarding your personal circumstances upon application.

If you do not make a full disclosure, then you may not be covered and your life insurance policy may not pay out.

Guaranteed acceptance

When an applicant is guaranteed acceptance for a life insurance policy or a funeral plan, then they will not need to provide any medical information to secure this type cover.

Life assurance

Life assurance is a type of policy that pays out a cash lump sum to loved ones when you pass away, (not if). An example being an over 50s plan.

The policyholder will pay the insurer a monthly premium throughout the policy for the cover to be effective.

Guaranteed Insurability Option

Also known as a special events clause or policy increase option, a guaranteed insurability option is when the details of a life insurance policy are changed by the policy holder due to a change in their personal circumstances.

FCA

Reassured, amongst many other life insurance providers, are regulated by the Financial Conduct Authority.

The FCA was created by Parliament to regulate the conduct of financial services in the UK. The FCA ‘aim to make financial markets work well so that consumers get a fair deal’.

Waiting period (qualifying period)

An over 50s plan, or over 50s insurance, have a waiting period or qualifying period (typically 12 or 24 months) from the start date of the policy.

During this period of time, if the policy holder dies of natural causes then a pay out will not be issued. If the policy holder dies as a result of an accident, then their death will be covered by the policy.

Trust

A life insurance policy can be written in trust by the policy holder so that they have more control over how the proceeds are spent.

Upon their death, the trust is handed over to the trustee who takes care of the claim and manages the pay-out (on behalf of the beneficiaries) as per their wishes.

Beneficiaries

The beneficiary (or beneficiaries) of a life insurance policy written in trust is the individual who benefits from the pay out from the policy (and is nominated by the settlor).

Settlor

The policy holder (owner) of the life insurance policy that is written in trust.

Estate

Any financial asset owned by the policy holder that passes away, such as their property.

Trustee

The trusted individual (nominated by the settlor) who manages the policy once the policy holder passes away, including distributing the funds as per their wishes (on behalf of the beneficiaries)

Probate

Probate is the legal process of which confirms that your executors are in the position to administer your estate to your beneficiaries.

Probate does not need to be granted if a life insurance policy is written in trust (as it is not considered as part of the estate).

Inheritance tax

“Inheritance tax is a tax on the estate (the property, money and possessions) of someone who’s died”.

For an individual in the UK after your estate exceeds £325,000 you are taxed at 40%! Although this threshold may seem a lot, it includes you property, savings, possessions and proceeds from your life insurance.

Visit https://www.gov.uk/inheritance-tax for more information.

Will

A will is written by someone before they pass away to determine what should happen to their estate after their death.

Sources:
https://www.reassured.co.uk/
https://www.moneyadviceservice.org.uk
https://www.gov.uk/inheritance-tax

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Insurance

How to Protect and Nurture Your Startup Business

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Running a startup business means taking risks. Whether you’re assembling a new team of new employees for the first time, balancing your finances, or investing your own cash to keep the company up and running, you have to roll with the punches in your first few years of existence.

This article takes you through the process of protecting and nurturing what you’ve got, enabling you to build your business up from the strongest-possible foundations. In doing so, you’ll be able to leap on into the next phase of your startup’s growth.

Get the Basics in Place

When talking about startup growth and sustainability, it’s impossible not to focus first on the basics. You need to be getting the business fundamentals absolutely spot-on in order to move onto bigger and better things – and it’s these small yet important details that can sometimes go unnoticed to the point of outright neglect. Neglecting these can mean the difference between thriving as a new business, and having to close the doors forever.

The basics include such processes as:

  • Maintaining rental and utility bill payments to your office space
  • Ensuring your staff are contracted and happy in their roles
  • Checking regularly on your finances to ensure you’re ticking over at the right rate
  • Investing incrementally in different areas of your business
  • Making plans for the future, including contingency plans for when the going gets tough

With these basics in place, you’ll be best-placed to build your business into a force to be reckoned with in the future.

Make Sound Financial Plans

Possibly the most crucial phase of your startup’s growth is the point at which you invest your profits, not your own cash or funding capital, into your business. But to get to this stage, you need to both plan out your finances, and make sure that you’re monitoring your ins and outs astutely.

There are, additionally, some important financial steps that successful businesses take in order to protect what they’ve built, including business liability insurance. Business liability insurance from Next Insurance will help you push back with the amount of cash necessary should you encounter bad luck on your business path ahead. This is deeply important for your financial planning and caution in the future.

Steady Growth

Startup leaders and serial entrepreneurs will tell you that the most challenging phase of their businesses’ development is the point at which the company stalls, stagnates, and stops seeming to grow. It’s at this point that the business might shrink or collapse – and all that you’ve spent so much time building will fall away.

In order to prevent this feeling of stagnation (and the risks associated with it), ensure that you’re always planning your next phase of growth months in advance. If you’re doing this proactive work, you’ll be nurturing your business into something sustainable, profitable and constantly growing and evolving throughout the years.

These tips will help you plan your startup’s journey from a fledgling business to successful enterprise while guarding the assets you possess.

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Insurance

What Is the Purpose of Key Person Life Insurance?

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As the owner of a business who is currently strategically planning, or thinking about beginning with this process, then you can be considering getting key-person life insurance, which is even known as the key-man type of insurance.

This insurance ensures coverage to the most vital person in the company. This policy works similar to that of life insurance as it protects your family financially after your demise. The key person life insurance policy as compared to life insurance of the personal type mainly protects your business.

What is a key person life insurance?

If the owner or any other significant employee of a particular company dies, the key-person life insurance will bring a death benefit to the business. If the reputation and the financial status of your company are closely associated with the name of a particular person, his skill set or reputation, you need to have critical person insurance to make sure that your company is not financially affected if he passes away.

This type of insurance is also useful for partnerships. When one of the two dies, the second person can buy shares of the one who has passed away. This insurance lets the business continue to run smoothly when the executive is looking for a replacement to take over or is implementing other strategies.

How does the key-person life insurance work?

The company ensures life insurance policy for its vital employees will pay for the premiums and will act in the position of a beneficiary for all these policies. It receives a payoff if the key person passes away which can be utilized to pay for various expenses, like getting a replacement, paying off debts and investors, or paying a pittance to the workers if the company dissolves.

What kind of person is the key person insurance for?

Looking closely at the structure of your business and your co-workers may help you decide if you need key person insurance. You may consider someone else apart from you as the key person in the company. If you’re the sole proprietor, you don’t require this insurance.

How much coverage should you purchase?

The coverage your business needs depends on factors like what effect would the death of the person has on your company financially. If you are the sole proprietor, you need to calculate how much coverage your descendants would need financially.

What are the insurance policy exclusions?

Before investing in the policy, read carefully what all it covers. You need to keep in mind that your claim can be rejected if you meet any exclusion. The most common exclusions include fraud of any kind, intentional dishonesty, or suicide within the contestability period, that is, if the person commits suicide within two years after the life insurance policy has been taken.

What is the purpose of key person insurance?

To make sure that your company is continued even after your demise and is not forced to be closed, you need a key person life insurance. Additionally, this insurance helps in sustaining your family after you pass away.

How to apply for key person insurance?

As this insurance is customizable, you need to check the coverage limits and read all the terms carefully. By increasing your premium a little, you can get an increase within your coverage too. Settling for the cheapest policy isn’t a wise thing to do. Renewing the policy later may end you up with paying more as the person will be older.

You need to keep in mind that your coverage limits alter as your business grows. You need to increase the value of the key person accordingly. If you don’t grow and change your policies accordingly, your family will not receive as much money as they might need.

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