Running a business can come with risks. Your death, disablement, sickness or injury could seriously risk the ongoing viability of your business. It is important to have plans in place for your family or partner, as well as your business. It is best to speak to an expert who can structure the most appropriate insurance package to cater for the needs of your business. Business insurance is a funding mechanism to provide a cash injection on the death, disability or critical illness of a business partner or key person.
A key person is someone within the business whom the continued successful operation of a business depends. Way way in which this insurance is structured is significantly different to normal life insurance policies. Firstly they are purchased by the business, all premiums are paid by the business and should anything happen to the key employee or key person, the business is the beneficiary to the policy.
Another side of Business Insurance is that of Buy Sell Agreements. A business partnership can be structured in many ways, but the best way to explain a straightforward Buy Sell Agreement would be if two partners were to take out life insurance policies on each other but not on themselves. When a “trigger event” occurs – as determined in the contracts drawn up by solicitors and outlined by the Insurance Policies – a lump sum is paid to the business partner exiting the business (or their family), and this then ends the partnership. The remaining business partner now holds 100% of the business.