ARE you adequately covered if a director, shareholder or key employee was diagnosed with a serious illness or passed away?
What if your MD or top sales person was out of action, what would the cost be to replace them? Would it affect profitability of your business? What key skills would you lose?
What continuity measures do you have in place to keep control of your business? How would you feel if your company fell into the wrong hands?
Businesses in the UK insure their material goods but all too often the most important assets are overlooked. Yet there are easy solutions.
There are two different types of business protection, each providing a cash lump sum in the event of a business owner or key person passing away or suffering a severe illness. They are designed to do two very different things; protect the profitability and continual running of the business or ensure ownership is protected.
Key Person Cover – this can be taken out by a business on the life of one of its employees or directors. The cover is designed to protect the net pre-tax profits in the event of death or serious illness of one or more of the company’s key employees. A key person is an employee with specialist knowledge who, if they were to suddenly no longer be there, would have a detrimental effect on the day-to-day running and profitability of the business.
Shareholder & Partner Protection – means a lump sum is paid out to the business if a business owner dies or suffers a severe illness. It provides the capital to enable the surviving business owners to purchase the deceased’s or incapacitated individual’s share of the business, allowing them to keep control of it.
If a shareholder can no longer be in the business, whether through death or serious illness, their share of the business would automatically pass to their beneficiaries. In order to regain and maintain control of the business, the remaining shareholders will need to buy that share of the business. For many businesses finding enough available capital to do this could be difficult and could, therefore, jeopardise the running of the business in the future. Shareholder and Partner Protection provides the framework where the right money is left in the right hands at the right time.
For further information or advice on Business Protection, call the BHIB Insurance Brokers Employee Benefits team on 0116 2819147.
By Jo Tressler
BHIB Insurance Brokers