Corporate Financial Services
Most businesses make sure that their material assets such as building and contents are insured against loss or damage. Many, however, overlook how crucial certain key individuals are to the success of the business and overlook the need to insure their 'human assets' against the unexpected.
If a business loses one of its key employees as a result of serious ill health or death, it will need to find a suitable replacement. This disruption could well have a direct impact on profits. Therefore it is important to identify key people in the business and consider implementing some form of protection, usually in the form of an insurance plan, to protect profits and ensure funds are on hand to cover the costs of finding a replacement.
It's not easy to put a monetary value on a key persons contribution to profits made, so you may required advice or guidance in ascertaining the correct level of cover.
Maintaining control and stability of a business in the event of death and/or illness of a director is vital to the continued success of firms. By taking the appropriate legal and financial steps, business owners can be confident that they do not find themselves exposed to financial and potentially moral difficulties.
The solution would consist of:
The share purchase agreement should detail what will happen to each director's share holding on death, retirement or disability and the insurance policies should be in place to provide the funds to carry out the provisions of the agreement. To ensure the share protection plan is effective it is essential that the insurance policies are underpinned by a suitable agreement.
Partnerships too should establish some form of agreement stating what should happen if a partner dies. As with Shareholder protection, life assurance contracts can be used to provide the necessary funds.
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