Business Protection Advice
Key Person Insurance • Business Succession • Buy/Sell Agreements • Business Expense Insurance
Protect your business and family’s wealth
When Business owners are often so focused on building their business, they often neglect to protect the investment to ensure the survival of the business if something unexpected occurs.
Key Person Insurance, funding for Buy/Sell Agreements and Business Expense Insurance can help by providing lump sums if a key person or business owner dies or suffers a serious illness or injury.
Key Person Insurance
Key person insurance is a specialised form of business insurance designed to protect a company from the financial impact of losing a crucial individual, often a key executive or employee, whose skills, knowledge, or leadership are integral to the company's success.
In the event of the key person's unexpected death or disability, the policy provides a financial cushion to help the business navigate the challenges associated with the loss, such as recruiting and training a replacement, covering temporary setbacks in revenue, or addressing outstanding debts.
This insurance serves as a strategic risk management tool, offering peace of mind to businesses by ensuring they have the financial support necessary to weather the uncertainties that can arise when a key individual is no longer able to contribute to the organisation’s operations.
There are two different purposes - ‘revenue purpose’ or ‘capital purpose’. It is necessary to distinguish between them for taxation purposes.
Buy/sell agrements and business succession
A buy/sell agreement for a business is a legally binding contract between business partners that outlines the predetermined terms and conditions for the potential sale of a business interest in the event of a triggering event, such as death, disability, retirement, or the desire to exit the business.
This agreement helps ensure a smooth transition of ownership by establishing a clear mechanism for valuing the business, identifying potential buyers, and stipulating the funding source for the purchase, often involving life insurance or other financial arrangements. By providing a structured framework, a buy/sell agreement helps mitigate disputes, facilitates a fair and efficient transfer of ownership, and contributes to the overall stability and continuity of the business.
The use of insurance as a funding source provides greater certainty for all parties and can be less expensive than taking on debt. It will help to eliminate the need for:
The business to be wound up or
A forced sale of the business or assets to pay out the departing owner (or estate) or
The remaining owner(s) to use personal assets or borrowings to pay out the departing owner (or estate)
How you’ll feel
Confident & financially organised with peace of mind about your financial future, even if life throws you a curveball
Business expense insurance
Business Expenses insurance is designed specifically for business owners or sole traders. It aims to minimise the financial impact of their sickness or injury by paying a monthly benefit to cover eligible fixed business expenses during a prolonged absence from work. This will allow a business owner to focus on recovery.
Business Expenses policies will usually pay a benefit up to 100% of your gross (eligible) expenses for a set term of 12 months after a waiting period has expired.
To be eligible you need to be a sole trader, in a partnership or a working director and be responsible for paying the business’s expenses. Eligible expenses may include costs for premises, services/utilities, equipment and leasing costs, salaries and associated costs for non–income generating employees, and accounting fees.
The policy is owned by the business entity with the business owner as the insured person. Generally premiums for Business Expenses insurance are fully tax deductible. The proceeds are taxable but the business can claim tax deductions for expenses paid.
