What a new business depends on
In the early days, a start-up is mostly its founders. They hold the ideas, the client relationships and often the bank account. Many have put in savings, taken a lower salary or signed a guarantee to secure a loan. If one of them could not work for six months, the business might not survive.
Protection for a start-up is about keeping that bet on track. It does not need to be elaborate. A few well chosen policies can cover the risks that would end the business, leaving the ones you can live with until you grow. Most founders find that two or three policies are enough to begin with.
What to put in place first
Start with the founders as people. Income protection keeps money coming in at home if illness or injury stops you working, which matters when you have little profit to draw. Life cover in trust looks after your family and can clear any guarantees you signed. Critical illness cover can follow when budgets allow.
If there are two or more founders, agree early what happens if one dies, falls ill or walks away. A shareholder agreement written now, while everyone is on good terms, costs far less than a dispute later. Shareholder protection can then fund the death and illness parts of it.
- Income protection for each founder
- Life cover sized to personal guarantees and family needs
- A shareholder agreement with options on death and illness
- Shareholder protection to fund those options
Growing the cover as the business grows
Once the company is trading profitably, it can start paying for cover itself. Relevant life cover and executive income protection can replace some personal premiums. When you take on staff who are hard to replace, key person cover comes into view, and group life can become a valued benefit for the wider team.
As the company becomes more valuable, shareholder cover should rise with it. Investors sometimes ask for key person cover on founders as part of a funding round, so it helps to have the basics in place before that conversation. Reviewing cover after each funding round or big hire keeps the amounts realistic.
Why applying early can help
Insurers set premiums using your age and health when you apply. A founder with no medical history will usually find cover simpler to arrange now than in ten years' time. Choosing guaranteed premiums can keep the cost steady as the business grows.
If one founder has a health condition, apply anyway. Insurers view the same condition in different ways, and a broker can approach the ones most likely to offer reasonable terms. Shareholder cover works best when every founder is included.
How Hi Tomorrow helps founders get started
We understand that early budgets are tight. We start with the risks that would hurt the business most and suggest a short, affordable list, explaining what each policy does and what you could add later.
We compare the insurers on our panel, help each founder with the application and set up trusts. When you raise money, take on staff or start paying yourselves properly, we can review the plan with you so the cover keeps pace with the company.