finance
protect from the WORST EVENTUALITIES
Running a business is never easy – and the past year in particular has certainly brought that statement into sharp focus. One of the big questions – perhaps the biggest – that businesses have to face is what would happen to their business if a key member of the team were to die or suffer critical illness. Sadly, the coronavirus pandemic has brought this question uppermost in many owners’ minds and provided them with the impetus to review their current protection. Businesses spend a lot of time and money insuring their property, machinery and equipment and on a range of benefits for their staff. However, in our experience, far fewer seem to consider the impact of the loss of a key person or business owner on the business itself. This is despite research published by Legal and General in 2019* that found 52% of businesses say they would cease trading in under a year if a key person died or became critically ill.
So, what can businesses do to protect themselves against these kinds of risk? There are a number of options available. Key Person Protection Businesses can take out an insurance policy (with or without critical illness cover) to protect their business against the loss of a key person or business owner and the resulting impact on profitability. The definition of ‘key person’ is anyone who has specialist skills, knowledge or contacts and whose loss to the business would cause significant financial difficulty. In the event that the insured person dies (or suffers from a critical illness, if covered), the business would receive a financial lump sum in compensation, which can sometimes be payable in instalments.
PREPARE THE UMBRELLA BEFORE IT RAINS. - a malay proverb
Shareholder / Partnership Protection Plans These plans allow surviving partners or directors of a business to remain in control, should the worst happen to one of them. Shareholder / Partnership protection
