If you are a company director running your own business, there will always be ‘what if?’ questions, that are quietly concerning.
What if one of the partners dies, leaving their share of the business to unknown or inexperienced beneficiaries? How would the company continue to be run effectively?
What if a key employee, such as a head of sales or technical expert were to become ill and need to take extended leave of absence from work?
Considering a company’s vulnerabilities’ and making provisions for if and when those times arise, is the safest way to protect an organisation and its future. There are a number of ways in which you can plan for those unforeseen moments; and put in place not only the relevant insurances policies, but, where appropriate, the legal framework that will ensure the necessary arrangements and firmly established.
There are three main type of insurance available; shareholder protection, partnership protection and keyman insurance.
Shareholder protection provides surviving business partners a lump sum cash payment on death. This means the funds are immediately available to ‘buy out’ inheriting beneficiaries shares from the company. The benefit is that it stops unqualified people inheriting a share of the business or in the worst case scenario, shares being sold to a competitor. Importantly, this policy not only provides the cash to protect all of those involved, it also means that arrangements are discussed and formally made in advance, minimising problems at a difficult time.
Partnership protection is very similar scheme which provides a lump sum payment on death or critical illness but is specifically for business partners, rather than shareholders. It can also be used to cover against the retirement of any partners. This is an insurance policy which is commonly used by a wide variety of organisations, from large corporations to multi partner practices.
Keyman insurance provides a different type of protection. This insures a business against the loss of a key employee, paramount to the successful running of the company, from either critical illness or death. Losing a key worker can create many difficulties for an organisation, such as a loss of sales or profits, or indeed the increased costs incurred through the recruitment and retraining of a replacement. Keyman insurance provides a lump sum of cash to absorb losses in this event.
With any type of business insurance, it is important that everything is set up correctly to meet the individual requirements of your company and that you are adequately covered. Our corporate consultants are able to not only arrange this type of protection for your business but can also review any existing scheme in place.
To discuss your business protection needs in detail click here to arrange an appointment with an English Mutual Financial Planner.