They say what you don’t know won’t hurt you, but small- and medium-sized enterprises (SMEs) could be missing out by not knowing about a potential means to save costs.
A study by insurer Legal & General found that only 30% of SMEs in the UK had heard of a Relevant Life Plan (RLP) – a term assurance plan available to an employee of a willing employer, which provides a lump sum should employees be diagnosed with a terminal illness or pass away.
RLPs can be a cost-effective way for SMEs to offer employees the benefits of a protection policy, according to Legal & General head of intermediary development Richard Kateley. The company said an RLP could save a business up to 50% per plan when compared to a standard life policy.
However, the State of the Nation’s SME research revealed that 86% of businesses with profits of less than £50,000 were not aware of the product, while 80% of businesses set up in the past two years had no idea such a plan existed.
The good news is – and here’s where advisers come in – 73% of businesses were open to the concept after hearing what it was about. Only 9% rejected the possibility of taking out a policy.
“Our research reinforces the important role advisers can play in raising awareness about protection products, given 73% of businesses were receptive to the idea of an RLP after it was explained to them. Another fact, if one was needed to demonstrate the power of advice, was that of those businesses that took out cover to protect their debt, 84% only did so after seeking advice,” said Kateley.
He added: “Advisers need to be proactive in this market and must continue to speak to SMEs, as many of them are either keen to have these conversations about protecting the future of their business or simply are not aware of the risks that they could be running.”
Legal & General surveyed more than 800 UK SMEs.
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