Business Protection

Protecting Your Business

The untimely death of a Company Director is a terrible upset to the family and indeed colleagues in the business.

Such a death can cause financial problems for the family of the deceased and also for the business.

The problem that most commonly manifests itself is what happens to the shares of the deceased?  Usually the shares will transfer to the estate of the deceased – now the issue arises – does the estate want to have an interest in the business and do the existing shareholders want the new shareholders involved in the business?  You can see the potential problem.


Co-Directors Insurance

A financial solution exists to the death of a shareholder in the form of Co-Directors Insurance.  Co-Directors Insurance provides for funds in the event of a Director passing away.  The idea is that the funds are available to buy back the shares from the estate of the deceased.  This solution provides funds for the Business when it needs to purchase the shares and also gives a cash amount to the family of the deceased in consideration for the shares.

There is a wide range of structures that can be used to put this form of Business Protection in place and this is where professional advice is required from your Financial Advisor, Solicitor and Accountant.


Key Personnel Cover

Another challenge can be faced by a business in the event of death of a key person in the organisation.  Such a person may have specific skills and technical knowledge crucial to the business.  There may be a key person in the business who generates the sales and loss of such a person would cause real difficulty for the business.  Sometimes a key person may have taken out loans to fund the business, the untimely death of such a person will see the loans called in.

Again there is a solution to the financial issues caused by the death of a key person in the business.  In this case a life assurance policy is arranged by the business for the benefit of the business.  This means in the event of a claim money is available to the business to be used in a number of ways, e.g. used to recruit a replacement or to clear loans.

Calculations can be done to illustrate the level of cover required.  In addition to life assurance cover, the insured can also be covered in the event of being diagnosed with a Serious Illness.