What is Business Protection?
Every business has certain key personnel who are vital to its success and prosperity. It might be the sales director, or it might be a specialist craftsman. Every business is different, but most directors will know which staff members are vital to prosperity.
If a partner in a business dies, there may be other problems. Apart from their loss to everyday business activity, there may be imperative reasons to buy out their shareholding so that it does not pass to outside investors who do not share the vision of the company’s future. Such unforeseen events can lead to crises, reduced revenues and even, in some cases, business collapse.
Protect your business
Business Protection is designed to protect your business in circumstances like these. You can choose the benefits you need and tailor them with additional features, such as waiver of premium during periods of incapacity, the choice of fixed or renewable terms and having index-linked benefits so that they stay in line with increases in inflation. In addition, you can change your benefits as your business needs change.
Arranging business protection is often thought to be lengthy and complicated. But actually, the principles are similar to any other type of protection.
The most significant differences are:
- Sums assured may be higher than personal policies
- Benefits may be paid to the business rather than the family
New work patterns are creating more self employed people and small companies – all more likely to need business protection. Whatever the size of establishment, every senior business person faces a serious responsibility, both financial and personal. Business protection provides peace of mind that if they or another key person were to fall terminally or critically* ill or die, the business could survive.
Business protection could help client owned businesses continue to trade in the event of a key person, partner or director falling terminally or critically ill or dying.
Key Person Protection
What is Key Person Protection?
The loss of a key person may result in reduced sales, loss of profit/turnover, wasted time, recruitment costs, the disruption of development plans or increased workloads for remaining staff.
If your business has an individual or individuals who are fundamental to its success, you should consider Key Person Protection.
Who is a ‘key person’?
A key person is an employee whose continued absence would affect the profits of the business. Someone whose skills, knowledge, experience or leadership are important to its continued financial success. Examples of a key person include, but are not limited to:
- Sales director
- IT specialist
- Managing director
- Head of product development
- Key sales people
Partner / Director Share Protection
What is Partner/Director Share Protection?
The loss of a partner or director may destabilise the business and can quickly lead to financial difficulties. Partner/Director Share Protection means if the worst does happen, the remaining directors or partners can stay in control of the business.
How does it work?
In the event of a partner or director dying, falling terminally or critically ill, Partner/Director Share Protection can provide a sum of money to the remaining partner(s) or director(s). This means the policy will pay out the sum assured on the insured event occurring, which may be an amount sufficient enough to purchase the deceased or critically ill partner’s/director’s interest in the business.
This protects the interests of co-owners and family members in the event of a death. In brief, each owner agrees how much his share is worth, and a combination of insurance policies and legal documents are put in place to ensure that should anything happen the co-owners buy out the family of the deceased for a fair value.
The details get technical. They depend upon the wording any pre existing partnership agreements or incorporation documents, and you need good advice.
There are no agreed equations to determine the value of a stake in a private company, though the firm’s accountant, by reference to other firms, can normally provide a ball park figure for debate. At the end of the day for the purposes of this insurance the numbers are normally agreed by thrashing them out round a table until agreement is reached.
Business Loan Protection
What is Business Loan Protection?
The loss of the person or people who have guaranteed a loan is particularly serious for a business. Business Loan Protection helps your client pay an outstanding overdraft, loan or commercial mortgage, should the guarantor die or become terminally or critically ill.
How does it work?
Business Loan Protection is life assurance (sometimes life assurance and critical illness cover) written on the life of an individual or individuals. When a Business Loan Protection claim is made, a sum equal to the outstanding debt could be paid to either the business or directly to the lender. lender.