The FTSE 100 insurer’s State of the Nation’s SMEs research, which saw Legal & General survey over 800 UK SMEs, also found that 80% of businesses set up in the past two years had not heard of an RLP.
Highlighting the vital role advisers play in raising awareness about protection, 73% of businesses were receptive to the idea of an RLP after it was explained to them, with only 9% saying they would definitely not take out the cover. On average, an RLP could save a business up to 50% per plan when compared to a standard life policy.
Relevant Life Plans are a term assurance plan available to an employee if their employer is willing to pay for it, enabling them to provide a lump sum to employees should they be diagnosed with a terminal illness or pass away. To date, the plans have been mostly favoured by directors, as a means of their company paying for their family protection in a more tax efficient manner.
The figures do show that awareness of RLPs has increased from 2015, when just 28% of businesses were aware of these policies. However, the latest figures remain below 2013 where nearly two-fifths (37%) had heard of an RLP.
Richard Kateley, Head of Intermediary Development at Legal & General, said:
“Relevant Life Plans can be a cost-effective way for SMEs to offer employees the benefits of a protection policy, but as our research shows, less than a third of the UK’s small and medium-sized businesses are aware of this important product.
“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. 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. At Legal & General, we are focused on helping advisers do just that.
"Relevant Life Plans remain one of the best ways of getting into the Business Protection market, but first we have to go out and talk to businesses to raise their awareness.”
