BusinessCover

What would happen to your business if you, another key person or a shareholder were too ill to work or died unexpectedly? There are various business cover types available to manage this risk effectively.

Whatever a business’s industry or size, people are at its core, ensuring things are running effectively and making the right decisions. But what happens if these influential people are incapacitated due to illness or if they die unexpectedly?

 

This scenario is one that all business owners must consider, even if only some will actually face it. Who would take the reins of the business and continue its upward growth? Would there be an impact on future profits or business valuation due to their loss?

While you cannot prevent these circumstances, you can ease the unexpected financial implications by arranging adequate protection.

 

Shareholder protection

If a business partner or major shareholder died or was too ill to help you run the business, what kind of impact would this have?

Without the capital to buy the shares, you could find yourself working with whoever inherits them or with anyone they decide to sell them to. If they had a majority shareholding, it could mean an unknown boss calling the shots.

By putting shareholder protection in place, you could ensure the business, or remaining shareholders, receive the funds to buy back the shares from a critically ill partner or their estate, which benefits everyone. Here are some of the key benefits.

  • The remaining partners keep control of their business
  • The affected partner or their estate gets fair value for selling their share of the business
  • Using an appropriate agreement can make sure any transactions are tax efficient

Key person protection

Many small businesses rely on a few key individuals who occupy several organisational roles.

Taking out key person protection provides capital (depending on the cover selected) if a key person is diagnosed with a specified critical illness or dies. This cash could provide a buffer to cover lost profits, a vital lifeline to pay loans, ease cash flow, and fund training and recruitment of replacement staff members.

How we can help

Whether you require shareholder or key person protection, the Shorts team will help you identify your protection needs and guide you through the various types of cover available to ensure you get the right cover at the right price.

If you would like to book a consultation with our team of qualified independent financial advisers, get in touch today using the form below.

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