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Business Protection Insurance

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Keyman Insurance | Partnership & Shareholder Protection
 

Risk is the invisible seam running through every business. Because we can never be sure what might go wrong tomorrow, next week, or a year from now, businesses do all they can to minimise the effects of unforeseen events.

Insuring machinery, IT equipment and vehicles is sensible business practice. We know these things go wrong, and we also know they are easily replaced. The same cannot be said of your most precious asset: your people.

Key employees and directors are the lifeblood of your business. They are the ones contributing to its profitability, building relationships and goodwill, motivating others, increasing sales. They may have a set of skills in short supply. They may be visionaries creating pathways to an even brighter future. Whoever they are, they are not easily replaced.

The loss of an employee to illness or death is never easy. The loss of a key person adds another layer of difficulty; business is disrupted, and finding a replacement will take time and resources.

Premier Choice offers bespoke, specialist insurance to mitigate the effects of losing a keyman, partner or shareholder your business needs in order to thrive.


Keyman Insurance

The financial strain of the loss or absence of a keyman soon makes itself felt: reduced productivity, loss of hard-to-replace skills, delayed contracts, a dwindling of confidence among clients and banks. For smaller business, the effects can be disastrous. Keyman Insurance is there to provide security, peace of mind, and continuity at a difficult time.

Who is a Keyman?

The employee whose contribution to the business makes a difference to its financial success. If you find it hard to imagine running the business without a particular individual, you have identified your keyman.

What is Keyman Insurance?

It covers the long-term absence if a serious/critical illness occurs, or death of a key employee, in the form of a payment to your business. This payment helps you to ensure continuity, maintain profits, and recruit a replacement for the role.

Who needs Keyman Insurance?

All businesses. Even the largest organisations have someone they rely on more than others, whose day-to-day input makes them pivotal to the business’s continued success. Smaller businesses are heavily dependent on their people too; the smaller the pool of talent and expertise, the more vulnerable a business is to the loss of one employee.

I’m a sole trader. Do I need this type of cover?

Yes. Unlike personal life insurance, Keyman cover is there for as long as you need it to preserve your business so that it can keep going without you if you fall ill. Since sole traders are responsible for their business debts, it is wise to have cover that protects your family from the financial consequences of illness or death.

How is the amount of cover needed calculated?

Insurance providers calculate cover according to a general set of rules. Most take into account a multiple of gross or net profit or a proportion of the keyperson’s net contribution to profits. It also varies according to your business; cover for new companies may relate to new borrowings and projected profit, while cover for more established concerns may include the cost of training and recruitment to replace a key person.

How much is it likely to cost?

There are several considerations: the level and term of cover you need, the keyperson’s age and health when you apply for protection, whether or not they smoke – everyone is different. The exact cost of cover will be available once terms have been issued by the Insurer.

How long should we cover our keyman for?

It depends on your business, and who your keyman is. Keyman Insurance is considered a short-term insurance if it is taken for five years. Longer-term cover will affect the premium. We will talk to you to help establish your requirements and devise a cost-effective plan that suits you.

Is Keyman Insurance tax-deductible?

Usually. If HMRC criteria are met, premiums can be classed as a business expense. We make sure that you are aware of the tax implications of any policy you take.

How can Premier Choice help us?

Because this is a complex area, Keyman Insurance is offered by only a handful of companies. Premier Choice has long-standing relationships with these organisations, and works with you to quantify how much Keyman cover your business needs. As an independent, Premier Choice is well-placed to offer the most competitive rates.


Partnership & Shareholder Protection

Partners and major shareholders have the future of the business in their sights, planning for the long-term, steering the company in the right direction. The loss of a partner to illness, disablement or death is a heavy blow for the family, and has serious implications for the business.

What is Partnership & Shareholder Protection?

It makes sure partners can maintain control of the business in the unhappy event of a partner’s death. It also ensures that the family benefit from the partner’s share of the business, and their contribution to it.

Who needs it?

Any business with more than one partner or shareholder.

How is this different from Keyman Insurance?

This cover differs in several important ways. It creates the right conditions for succession-planning, and provides for the affected partner’s or shareholder’s family. It is a good idea to consider having both Keyman and Partner & Shareholder cover to help protect profits, meet the company’s commitments, and provide funding for business continuity. A partner or shareholder may also be your business’s key person.

Why do businesses take out this kind of cover?

For many reasons. The long-term future and direction of the business depends on its major shareholders and partners; losing a partner to illness, disablement or death has the potential to expose the business to loss of control and a turbulent period of succession. Partnership and Shareholder Protection covers funding to buy the partner’s beneficiaries’ share, keep control of the business and steer it towards a smooth succession.

What about the partner’s next-of-kin?

The policy protects them too, by guaranteeing they will receive quick payment for their share of the business. Beneficiaries who have neither the experience nor the appetite to contribute to the business appreciate a swift resolution of their partner’s business affairs.

Why should I choose Premier Choice?

This is a complex area of insurance, involving trusts, legalities and cross-option agreements. Premier Choice has long experience of navigating businesses through these. Because Premier Choice works with main insurers specialising in partner and shareholder protection, we’re able to offer independent and expert advice.


 

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