Business risk calculator
Please amend the fixed time in years so that it fits within this range.
The multiple depends on market conditions, expected growth rates and the industry that the company operates in. For convenience and simplicity, a predefined set of multiples have been provided based on growth expectations. Use the slider bar as a guide and select the most appropriate multiple for the business (between 1 and 6). And remember the higher the multiple, the higher the valuation.
Health risks for
Results in ‘real terms’
For every 100 individuals, {{ arrData[currentPerson].r1 | number : 0 }} will die before their chosen retirement age according to population and industry statistics.
How would the business cope?
No one ever likes to think about a colleague dying unexpectedly. But the reality is that if this did happen, the impact on the business could be significant – both in the short and longer-term.
A back-up plan
Business Protection is really important to make sure the business can continue to operate without that key person, and that it’s protected for the future. A cash injection to the business can help to provide much needed continuity at a difficult time. The money could be used to help purchase the company shares from beneficiaries, repay business debt and/or implement a plan to replace lost revenue
Results in ‘real terms’
For every 100 individuals, {{ arrData[currentPerson].r2 | number : 0 }} will suffer a serious illness according to population and industry statistics.
How would the business cope?
If a key person suffers a Critical Illness they’ll probably need some time off work for treatment and recuperation, before they even consider returning to their role and work (if at all). And this could very quickly affect the various areas of the business they were essential to, such as sales, operations, etc.
A back-up plan
Protecting people should be an integral part of any business plan as the financial impact on business operations and day-to-day performance could happen very quickly. There may also be additional financial costs, such as temporary staff, or recruiting the right person with the right specialist skills which can take time.
The road ahead may be unknown, but by putting Business Protection (which can include Critical Illness) in place for the key people within the business, it will ensure the remaining owners maintain day-to-day control of the business and safeguard its financial future.
Results in ‘real terms’
For every 100 individuals, {{ arrData[currentPerson].r3 | number : 0 }} will suffer a serious illness or die before the chosen retirement age.
How would the business cope?
If a key person in the business were to suffer a serious illness or die, the immediate and longer term impact could be significant. So making sure there is a back-up plan in these scenarios could be essential to its survival.
A back-up plan
Business Protection is simply life insurance (which can also include critical illness cover) owned and paid for by the business. It’s usually written on the ‘life of another’, either someone crucial to the firm’s profits, or one or more business owner. It can help safeguard a company’s financial future against the unexpected loss of people who are integral to the business.
Basis for the calculations
These statistics give a reasonable guide to the average experience expected over a large number of people, individually everyone is unique and as such this should only be used as a rough guide. It has been assumed that every partner/owner has 100% responsibility to ensure debts are repaid, even if they do not receive a 100% share of the profits.
This calculations are based on the probability of the described events occurring between the current age and end age.
Risk of death
Death probabilities are based on mortality tables published by the Institute and Faculty of Actuaries’ Continuous Mortality Investigation ('08' series assured lives mortality tables). The industry rates are projected to apply to a population of insured individuals (i.e. people who own life insurance policies). LV= have adjusted the rates provided by the table to be applicable to the general population (including people who do not own insurance cover) based on our internal views.
Risk of suffering a serious illness
These probabilities are based on the rates of a critical illness occurring, published by the Institute and Faculty of Actuaries’ Continuous Mortality Investigation ('08' series accelerated critical illness morbidity tables). These rates were adjusted to be applicable for standalone critical illness, based on a comparison of market experience and published morbidity tables. Illness probabilities assume you do not die in the period selected.
Combined results
If more than one person is selected the combined column gives the probability of the event happening to either person (or both) assuming they are independent lives. If more than one person is selected the probabilities refer to a difference period of time for each, using the entry ages and retirement ages for each person as input to inform the period of calculation.
Potential financial impact for
Result for profit
This shows the proportion of profit (in £’s) the key individual is responsible for. And more importantly, the amount a business may lose if the key individual suffers a critical illness and is unable to return to work, or dies.
The likely impact
Replacing lost profits and possibly recruiting a replacement (with the right skills) can put real financial strain on the business at a difficult time.
A back-up plan
Safeguard your business from this potential issue with the help of your financial adviser and Business Protection cover.
Result for repayment (debts)
This uses the total amount of debt carried forward from Step 2.
The likely impact
It’s a stark reminder that some, if not all, the business debts may need to be repaid immediately if the key individual suffers a critical illness and is unable to return to work, or dies.
A back-up plan
Safeguard your business from this potential issue with the help of your financial adviser and Business Protection cover.
Result for ownership
This shows the share of business the individual owns in £’s. And more importantly, highlights the monetary impact on the business should that key individual suffer a critical illness and is unable to return to work, or dies.
The likely impact
It quickly reveals how fragile the business could become without that key individual and the uncertainty surrounding ownership and what happens to their shareholding. The surviving owners could lose control of the business, or boardroom confusion could impact its ongoing success.
A back-up plan
Safeguard your business from this potential issue with the help of your financial adviser and Business Protection cover.