Life / Medical

Your business can face financial risks that are insurable

The Impact of Loss of a Key Person


DEATH
Should a person who is key to the business die, there are critical  exposures to the business in terms of additional and previously unforeseen costs. Such costs could impact upon the short term viability of the company to continue trading.

These could include:

  • The impact of creditors seeking immediate payment through uncertainty of the businesses future
  • The costs associated with recruiting and securing a replacement person of equal calibre
  • Interruption of the income stream to the business during the replacement and training process
  • Wind up costs of the business, if the business is not saleable.


ILLNESS OR DISABILITY
Almost as debilitating to the business as a death, is the impact of a key person being unable to work through a period of prolonged illness or disability.

Consideration to protecting the businesses future solvency surround:

  • Protecting and retention of client relationships
  • Avoidance of the triggering of any financial encumbrances
  • Ensuring retention of the key persons ongoing ability to generate income to the business
  • Avoiding losing the key persons knowledge and skillsets
  • Loss of Profits
  • Reduced ability for the business owner to continue to draw an income as well as pay for replacement labour costs and drop company in profits.

Key Person Insurance mitigates such losses and exposures

Shareholder or Business Partners Death

Protection of the ownership of the business can be secured in the event of the serious disablement, illness, or death of a shareholder/ business partner.
 

This avoids the surviving shareholder being in business with the deceased shareholder/business partners estate or spouse. It means that the deceased shareholder/business partners estate/family are paid the value of the shares and the surviving shareholder/business partner receives the deceased’s shareholding and retains control of the business.
 

The money needed to purchase the deceased shareholder/business partners shares can be funded through insurance instead of the surviving shareholder been put in a situation of having to fire sale assets, raise large amounts of capital at a time where the future of the business is uncertain or risk the shares been sold on the open market to a competitor.

 

Guarantee and Commercial Loan Release

Should a business owner become disabled, ill or dies, insurance cover can be purchased to provide cash to the business for commercial borrowings undertaken and the repayment of debt. Personal guarantees can be met and debt indemnified within the cover afforded, reducing the financial business exposures.

For more information on these products or any insurance query please contact your nearest BWRS office.

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