Business Protection Plan

How would your business cope with the loss of a key person?

The effect of such an event could be financially devastating - but this risk can be minimized if you have the right protection in place. A professionally structured business protection plan can help ensure your business survival if misfortune should strike.

Four key areas for consideration include...

1. Repaying business loans
2. Repaying loan accounts
3. Buying out the interest of a partner or co-shareholder
4. Replacing a key employee

Repaying business loans

Business loans are often secured by the personal guarantees of the principals and their families. If you were to die or suffer a serious illness, the cash flow required to service any business loan may be affected. And if creditors are not prepared to roll the loan over (i.e. call it in), then your personal assets and those of your family may have to be sold.

A business protection plan can provide the cash required to help repay business loans and in doing so protect your assets and estate.

Repaying loan accounts

Have directors or shareholders given your business a loan?
If a director or shareholder dies, the estate usually has the right to demand immediate repayment. If the loan has been used to provide working capital, your business may not have a cash reserve to pay out the loan.

A business protection plan can provide the cash you need to help repay the loan and avoid any cash flow problems that might arise.

Buying out the interest of a partner or co-shareholder

In situations where there are two or more partners or co-shareholders in a business, significant problems may rise if one dies or suffers a major illness.

Would you or any other surviving partner or co-shareholder be prepared to have the deceased or seriously ill partner's family come into the business, or nominate someone to look after their interests? Would you be prepared to sell assets to pay out the interest of the deceased or seriously ill partner or co-shareholder?

If not, we strongly recommend that you obtain legal advice on drawing up a formal arrangement that creates the right and obligation, under defined circumstances, for one partner or co-shareholder to purchase the interest of another and to establish how that interest will be valued.

One of our business managers can tailor a business protection plan that can provide the money to support this agreement - enabling the surviving partners or co-shareholders to purchase the deceased or seriously ill partner's interest.

This type of arrangement can help your business continue to trade with minimum financial disruption.

Replacing a key employee

Most small businesses rely heavily on the contribution of one or more key people.

If one or more key employees were to die or suffer a serious medical condition the effects on your business could be devastating. For example, productivity could fall, job orders or contracts could be lost, future plans could be jeopardized.

A business protection plan can provide the cash needed to replace any loss of revenue, find and recruit a suitable replacement, and help your business survive.

Contact

To learn more about the coverage that best suits your organization and to purchase insurance contact us.