Business Protection aims to reduce the financial impact of death or critical illness affecting key people within your business.
Business protection plan has been specifically designed for the following situations:
- Business Loan protection
- Key person protection
- Partnership or Shareholder protection
Business Loan Protection
If you intend to secure finance through commercial loans you may want to consider the following:-
A commercial lender will often make a business loan subject to repayment on the death of certain, often key, individual. Alternatively, if finance has come from a director's loan account, if the director were to die then their estate may demand repayment of the outstanding loan.
Have you thought how your business would meet any ongoing repayments, if one of your key people died? How would you finance full repayment should the lender call-in the loan early?
Business loan protection can help to protect the future financial resources of your business by providing it with a cash sum that can be used to help repay a loan on the death of a specific individual.
It is also possible to arrange for a cash sum to be paid out, if the key person suffers a critical illness.
Key Person Protection
Your employees are one of the most important resources for the future success of your business. Have you given thought to how your company would cope if a key member of staff were to die or suffer a critical illness?
The death or critical illness of a key person is likely to have a significant impact on your business. You could suffer a loss of profits, be unable to quickly recruit a suitable replacement and face significant disruption to your activities.
However, you can help protect the future survival of your business with key person protection, which can help you financially cope with the loss of a key person.
Shareholder or Partnership Protection
This applies to you if you're a shareholding director, or in a partnership.
The success of your business can depend on those who own and run the business. Have you ever considered how your business would cope if a partner or shareholding director died?
It is likely that the death of a partner or shareholding director would have a huge impact on the future of your business. The surviving partners or directors may struggle to continue the business or even to retain control of it. In the worst-case scenario, the financial strain may force the business to cease trading.
Similar problems could arise if a partner or shareholding director were to suffer a critical illness.
Your share in the business will be one of your most valuable assets and you will doubtless wish to protect this value for the benefit of your family.
Business protection can provide funds on the death of a partner or shareholding director. A legal agreement ensures that these funds are used to purchase the deceased's share of the business from their estate. It is also possible for a similar payment to be made if one of the partners or shareholding directors suffers from a critical illness.
Protecting the value of your business
If you depend heavily on the skills and judgements of others within your business, who are vital to its effectiveness and profitability, it may be worth stopping to consider how much of an impact it would be if they died or became seriously ill. It could cause:-
- Loss of profit
- Interruption to cash flow
- Disruptions to loan repayment
- Changes in shareholder control
In some instances the financial burden can be so great, that the business is unable to continue.
The concept of business protection allows you to put in place arrangements that ensure the necessary funds become available on the death, or serious illness, of those key to your business. These funds can be provided through the use of appropriate life cover.
Call us now to arrange an obligation free quotation.