For many business owners, the bulk of their personal wealth is tied up in their business. In fact, studies show that for the average owner, up to 85% of their wealth lives within the company, yet 98% don’t know exactly what it’s worth.
From an advisor’s perspective, whether you’re a wealth manager, accountant, or banker, that gap isn’t just a missed opportunity for growth. It’s a risk.
Because you can’t protect what you don’t fully understand.
The Link Between Business Value and Insurance Protection
Business protection insurance, whether it’s key person coverage, shareholder buy-sell agreements, disability insurance, or other forms, exists to safeguard the company against unexpected disruptions. But the right amount and type of protection depend entirely on knowing the true financial value of the business.
Without an accurate valuation:
- Coverage amounts may be too low, leaving owners and stakeholders financially exposed in the event of a loss.
- Premiums may be unnecessarily high, tying up cash flow in over-insurance that doesn’t match actual needs.
- Buy-sell agreements may be misaligned, creating tension or inequity if one partner needs to exit unexpectedly.
As an advisor, your role isn’t just to help owners “get insurance.” It’s to ensure they have the right protection, based on up-to-date, data-driven insight into their company’s value.
Why Annual Valuations Matter
Business value isn’t static. It changes with market conditions, growth trajectories, operational changes, and broader economic factors. A valuation from three years ago is rarely relevant today.
Annual valuations allow advisors to:
- Adjust coverage proactively
If the business has grown significantly, insurance needs to grow with it to avoid under-protection.
- Support strategic decisions
With current value data, owners can see whether they’re over- or under-insured and redirect resources accordingly.
- Strengthen owner-advisor trust
When you come to the table with concrete numbers, you demonstrate that your recommendations are grounded in fact, not guesswork.
The best protection strategies aren’t reactive. They’re planned, reviewed, and refined regularly.
The Risk of “Set It and Forget It”
Many business owners set their insurance coverage when they first launch or during a major growth milestone, then never revisit it. This is where the gap between actual value and insured value widens, often without anyone noticing until it’s too late.
Imagine a business that was valued at $2 million when its key person policy was put in place. Five years later, the company is worth $5 million, but the coverage is still based on the old figure. A sudden loss could jeopardize operations, strain finances, and put personal wealth at risk.
From the advisory perspective, this is avoidable if you have access to accurate, timely valuations.
Turning Valuation Into Action
At interVal, we believe valuations aren’t just for sale events or financing rounds. They’re an ongoing health check that gives both owners and advisors the clarity to make informed, forward-looking decisions.
When you integrate annual valuations into your client conversations:
- You identify gaps before they become problems.
- You align insurance coverage with reality, not assumptions.
- You deepen your role as a strategic partner, not just a transaction facilitator.
Business value is the foundation on which every major protection strategy is built. Without it, insurance planning becomes guesswork.
For advisors, combining valuation insights with tailored insurance recommendations isn’t just good practice. It’s a responsibility. Your clients are counting on you to safeguard not only their company, but the personal wealth and legacy it represents.
And when you can confidently say, “This is what your business is worth, and here’s how we’re protecting it,” you’re not just selling a policy — you’re protecting their life’s work.
