Small and medium-sized businesses are the life blood of the UK's economy. The latest figures suggest that there are over 4.8 million SME's that employee over 13.7 million people.

Each of these businesses will be different in many ways. They may be a sole trader, partnerships or a limited company. Each business will have owners with different goals, personal and business aspirations and of course skill sets and capabilities.

There will be one thing In common; each business owner, director or partner will want the very best for their company. Almost certainly they will be concentrating on the day to day challenges of running a business successfully. This takes time, effort and determination, leaving business owners with little or no time to look after their own financial objectives or to protect the very business they have created.

Legal & General recongnised this fact and conducted research with the help of the British Chamber of Commerce: they surveyed 1,000 SMEs and the results will speak for themselves. The biggest and most shocking findings where that there is an insurance protection cap in the UK that is now estimated at over £1.1 trillion!

50% of the businesses surveyed have corporate debt, yet only 46% of those businesses have life insurance policies in place to protect that debt. More worryingly, that 44% of businesses owners expected their business to fold inside of 12 months should a key person die, however only 4% of these business have any policies in place to stop this from happening!

These statistics are alarming to say the least. Business are nurtured, driven and thrive due to the skills of a few key people. These key people are the heart and soul of a business and as such, a business cannot survive without them.

Key people are the biggest commodity in a business. Ask yourself this question: which event would damage your business the most, and which will be the easiest to replace?

• A company car is stolen
• Somebody steals the computers
• Some stock is damaged
• A business owner, director or partner suddenly dies

Which of the above risks do you already have covered by some form of replacement insurance? So the big question is what happens to the business when a key person dies without the relevant life policies in place? This is a very basic overview as each business and circumstance will be different:

• The banks may well call in any loan that the key person was the security for. They may also withdraw or reduce revolving credit or overdrafts too due to lack of confidence.
• The deceased family may wish to sell the key persons share or run the business themselves!
• You may wish to buy those shares however you may not have the working capital available.
• There would be a huge increased work load on the remaining owners, directors or partners. There may be a drop in productivity, drive and enthusiasm by the staff.
• Word will soon get around you are struggling and your competitors will muscle in. And clients will be looking for a more reliable supplier.
• Your suppliers may stop or reduce your credit as they will find out you are having or could be having funding issues.
• After many months of battling the inevitable may happen and the business cannot afford to trade any longer. It all comes crashing down. The banks will call in any personnel guarantees and the surviving owners, directors or partners may lose their homes as well as their business.

Insurance is not expensive - it's a genuine business expense the same as any other cost to the business and if it allows your business to trade it shouldn't matter how much it costs as long as you can make a profit. A business is only worth as much as its directors, partners and key staff. Protect yourself and your business, don't be a statistic.

For more information and a free unbiased business review from NMF call 0845 468 8663 or visit www.nmf-mortgages.co.uk [1]