These policies can prove invaluable at helping your company continue to trade but they could be nigh-on redundant if you or other key people in the business can no longer work.
Have you insured the most important asset of your business? That’s you.
Rather than publishing plenty of grim statistics here about death and serious illness during your working lifetime, we want to focus on a valuable solution to help your company continue to trade and to support your family.
There are effectively two types of insurance cover that many businesses or their owners need: Key Person and Shareholder Protection.
Rarely in our industry does a product have such a self-explanatory name: key person insurance is intended for a business to cover someone who is integral to the ongoing operation of the firm. This could be a founder, a key sales or technical expert or anyone without whom the company may struggle to continue trading.
Key person insurance is taken out by the business and can pay out on death or diagnosis of a critical illness, providing a valuable cash injection to support the firm with what could be valuable headroom during a difficult time.
The proceeds may go towards external support, repaying debt or simply providing a financial buffer for a time when the enterprise may not run as efficiently as normal.
If you have other shareholders, have you considered the impact on the company if they were critically ill or were to die? Could you afford to buy their share? Would you like their beneficiaries to be your new business partner? And what about your own personal situation: would your nearest and dearest want to become an owner if anything were to happen to you?
Shareholder protection covers the value of the business owners’ shares and can legally enable other shareholders to buy them, funded by the lump sum payable from the protection policy.
This enables those remaining owners to continue to hold a stake while relatives of the deceased shareholder are able to make a clean break from the business, should they not wish to be involved further.
Find out more about shareholder protection from this brief overview of what in can do for your business.
It’s not only business owners or those with an equity stake who qualify for protection.
Is there a colleague vital to the operation? On whom everything depends? It could be a technical expert role, someone in the front line, rather than the boardroom. Is that person key? Are they covered? And what is the likely outcome if they have been overlooked?
As you can see, even more questions but we are happy to ask them when it comes to finding the right policy for your business, its unique people and the importance of their role. Starting a conversation on a subject many would seek actively to avoid is where we come in.
We offer a free 30-minute initial consultation with a corporate lawyer from Punter Southall Law on shareholder protection. Get in touch to set up a meeting.