If you run your own business, then you’ll no doubt know just how challenging it can be to keep on top of your finances. Whether you’re in the early days of your venture or you’ve been established for a number of years, bills can quickly add up and eat into overheads.
One business cost that is often unavoidable is insurance. Of course, you want to make sure that your business is fully-insured and covered should anything go wrong, but you also don’t want to spend hundreds of pounds on a policy that you may not need for the entire year.
It’s a common dilemma for both business owners and individuals without a permanent car – do you splash out on a long-term policy that covers your vehicle for the entire year, or do you opt for temporary vehicle insurance every time you want to drive a new vehicle? Both have positives and downfalls, and in this article, we’ll attempt to unravel which is the best option for you.
Why take out insurance?
In the United Kingdom, you cannot drive a vehicle without a valid insurance policy, both as an individual and as a business owner. As a legal minimum, you should have third-party insurance, which means you’ll be covered if you have an accident and cause damage to another person, vehicle, animal or property.
Third-party insurance, however, does not cover any other costs, such as the cost of repairing your own vehicle, or the cost of your recovery. That’s why it is recommended to take out a fully-comprehensive policy – even if you want to save money, it pays to be protected against unfortunate accidents and incidences and could save you in the long-run.
Vehicle insurance also covers lawsuits and legal fees which could be brought against you when you are involved in an accident, and it can cover other incidences such as fire and theft, should you take out a comprehensive plan. As a business owner, this is important – people are more likely to claim against a business than they are an individual.
What are the benefits of temporary insurance?
Temporary car insurance, like the policies offered by companies such as Call Wiser, have been on the increase in recent years, with frugal business owners and individuals looking to save money and get more bang for their buck. If you’re a freelancer, only hire vehicles on an occasional basis, or don’t have a permanent vehicle and instead borrow from friends and family, then there’s no point in you splashing out in an expensive coverage policy.
- Flexibility of dates: If you’re planning on making a long journey but don’t have an exact date in mind, then you’ll likely invest in a car insurance policy that covers you for an extended period. This isn’t always the most cost-effective option, as you’ll essentially be paying for coverage on days you won’t need it. That’s why temporary insurance is the cheapest and most cost-effective option, as you’ll be able to cover your vehicle for the exact dates and times – no wastage or unnecessary insurance.
- Flexibility of vehicles: Not sure which vehicle you’ll be driving on the day of your journey? Planning on picking up a hire car on the day of your travel? That’s another significant benefit to temporary insurance. Of course, if you want to, you can splash out on comprehensive “drive any car” insurance policies, but these are expensive.
- Instant coverage: Need to deliver a parcel overnight or head into town to visit a relative? Temporary car insurance makes that possible, as you’ll be able to get instant coverage for your vehicle. Don’t let long, drawn-out car insurance policies stop you from doing what you want to do – just go for a temporary plan.
- Add additional drivers: Want to take it in turns to drive the car into the city? With temporary car insurance, you can add additional drivers to your plan, often for free, to save you time and headache. Always check the small print of your policy to make sure that this option is available for you, as you may have to pay extra to upgrade.
What are the drawbacks of temporary insurance?
- More expensive: Because of the convenience of temporary car insurance, you can expect to pay more for your policy in the long-term than you would by taking out a long-term plan. Add up the costs and see which is the cheapest for your needs.
- Have to set up every time: If you’re always on the road and need to get from A to B as soon as possible, then having to sign up for a new temporary car insurance policy every time can be a challenge. Many providers have apps and one-page sign-ups to make purchasing a plan easier, but it’s still a hassle when you’re leading a busy life.
- Not tied down to any plan: Because you’re not tied down to a particular plan or policy, it’s easy to get confused over what you’re covered for. Make sure you read the terms and conditions of your policy every time you sign up – things change from provider to provider, and you won’t always be covered for things like windscreen chips or wheel replacement if you’re taking out a “cheap” temporary policy.
- Short dated: Typically, that’s the whole point of temporary car insurance policies, but this can be a downside if your trip is extended or you want to drive for longer periods of time. Of course, you can contact the insurance provider to have your policy upgraded or extended, but this isn’t the most cost-effective option.
What are the benefits of long-term insurance?
- Permanent cover: When you take out a long-term car insurance policy, you’ll be covered throughout the length of your policy. Plus, most car insurance policies will automatically renew unless you cancel so that you won’t go without cover.
- Easy to customise: Made customisations to your vehicle or want to add a second driver midway through your policy? Most insurers make it easy to customise your policy mid-period; simply get in touch and ask for assistance.
What are the drawbacks of long-term insurance?
- Locked in: Unless you have a flexible policy, you’ll be locked-in to your car insurance provider for the length of your period. Of course, you can sign up for another policy at any time, but you’ll still be liable to pay for your original car insurance policy.
- No refund: Most insurers don’t offer refunds on insurance periods that you don’t use. Whether you only drive at certain times of the year or decide to stop driving altogether, you’ll be paying for a policy you no longer want or need.
- Limited to one vehicle: Unless you take out a fully comprehensive plan, you’ll only be covered to drive one vehicle. Adding additional vehicles can be expensive.
Both temporary and permanent car insurance policies have their uses, and it’s up to you to determine which is best for your requirements and budgets. If you need to be insured on a regular basis, or you’re taking out temporary policies more than three or four times a year, then long-term car insurance may be the most cost-effective option. Happy driving!
Life Insurance Jargon Buster
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 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.
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.
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.
The written name of the person in which the life insurance policy protects.
The guaranteed pay out amount from an insurance policy. The sum assured (or cover amount) is calculated at the beginning of the policy.
A sum paid monthly by the policyholder to remain covered by the life insurance policy.
A guaranteed premium remains fixed throughout the life insurance policy, (or until you pass away in the case of whole of life)
A reviewable premium is reviewed by the insurer at regular intervals and the rate can be increased.
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.
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.
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 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.
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.
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.
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).
The policy holder (owner) of the life insurance policy that is written in trust.
Any financial asset owned by the policy holder that passes away, such as their property.
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 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 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.
A will is written by someone before they pass away to determine what should happen to their estate after their death.
How to Protect and Nurture Your Startup Business
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.
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.
What Is the Purpose of Key Person Life Insurance?
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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