• 72% of female business owners have no business protection
• Fewer than a third (32%) have spoken to an adviser about protection
• 45% of female business owners would rely on their savings if they couldn’t work for six months
In 2014, 20%[1] of SMEs were solely or partially-led by women, which equates to around one million companies in the UK. As this trend grows, more women will have responsibility for employees as well as for themselves and their families, so this lack of safety net has both personal and professional implications. However, the weight of this responsibility has failed to prompt female business owners to take action and seek advice on protection. Fewer than one in three (32%) have spoken to an adviser about it.
By far the greatest stimulus for taking out protection, and a clear point at which advisers should engage, is when female business owners become self-employed or set up a business (69%). An additional 10% were prompted as they took out a business loan, which is a positive sign given banks now rarely make protection cover a condition of their lending.
Stephen Crosbie, Protection Director at Aegon, commented: “Female business owners are responsible for a million companies in the UK today and it’s concerning that so many are risking their financial futures through a lack of protection. These findings highlight that two thirds of female business owners have failed to have a conversation with an adviser about protection. This presents a significant opportunity for advisers to talk to female business owners, and those hoping to start their own business, about the value of business protection. ”
In the event of illness or death, nearly half (45%) of female business owners would rely on their savings to support their business and their families financially, but this itself raises concerns. Just 13% think their savings would last a year or more, and 22% fear they’d only last between one and three months. This is also unlikely to factor in the extra costs associated with long-term illness. Macmillan Cancer Support research from 2013[2] found that having cancer can cost an individual an additional £570 a month to cover expenses such as hospital car parking and home heating.
Stephen Crosbie, Protection Director at Aegon, continued: “Most people running a business have a greater protection need with the burden of financial responsibility for their employees to consider on top of themselves and their families. Many expect to turn to savings in the event of the unexpected but the reality is that these are unlikely to provide the financial support these women need for both their families and the day to day costs of running a business.
“This group is likely to be time poor, so there’s a real need for advisers and providers to develop simple protection tools and information to reach female business owners and ensure they don’t leave their businesses and families unprotected.
By factoring protection in to all SME financial planning, advisers can make sure that those businesses, and everyone in them, are covered for all eventualities.”
Celine Dorman, Financial Consultant, AIMS said: “Aegon’s report highlights that the female business protection market is an area of huge potential for advisers, and that business protection continues to be undersold.
“Selling business protection is no different to selling family income benefit to a husband and wife with a family. In most cases, the male is price driven and the female is protection driven. Whether you create a family or a business, as an entrepreneur your business becomes your “baby” and a woman’s maternal instinct is to protect it. This is what makes business protection an essential component of the business model and not just a consideration.
“Our entrepreneurial society is dependent upon people taking leaps of faith into business ownership and I firmly believe women are the backbone to creating and aiding in the longevity in business. For this very reason, I began attending various networking events and writing articles in magazines specifically aimed at women in business. The response I received reinforced my belief in the demand for business protection, yet the lack of understanding around the subject was outlandish. Simply talking to women who support business was the first step in helping them understand the value of having business protection.”
Dorman continued: “While new start-ups are generally cash poor and may not have a need for business protection in the early stages, it’s a good time for advisers to start building relationships and highlighting the risks owners face as the business grows. Thus, ensuring when the need for protection is imminent the business owner knows who to speak to.”
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