Business Protection – What you need to know

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Like everyone you need to protect yourself and your family against the financial impact of serious illness or death. However, as a business owner your protection needs are different. Your business will provide some financial security, however you probably are not entitled to employee benefits. In addition, the future earnings of the business is dependant on others.

As a business owner you need to consider what would happen to your share of the business if you died prematurely and the financial impact that could have on your family. You also need to consider what would happen to the business if a co-owner died prematurely.

What would happen to your family if you died prematurely?
• Would they take over your share of the business?
• Would the remaining shareholders have the funds needed to buy your share back from your family?
• Has this plan been formalised?

What would happen to your business if a co-owner died prematurely?
• Would you maintain control of the business?
• Do you have the funds to buy back their share of the business from their family?
• Has this plan been formalised?

A Business Protection Life Policy gives you real peace of mind

Your plan can be used to:
• Provide the funds needed to buy out a partner’s share of the business.
• Ensure your family gets a fair price.
• Ensure a business partner retains ownership and control.
• Avoid the need for personal loans to be taken out.
• Provide a formal plan of what should happen.

There are a number of Business Protection policies that can be availed of, depending on the type of Business structure that is in place and the type of cover that is required:

1. Keyperson Insurance

• What is Keyperson insurance designed for?   It compensates a company when a key employee dies or becomes seriously ill.

• Why take out Keyperson insurance?  It helps minimise the financial impact of losing key employees

Keyperson insurance benefits:

• If the employee dies a cash sum is paid to help maintain the business
• Can help minimise interruption to business activity
• Can help with bank loans where the key employee gave a personal guarantee
• Can help pay off loans made to the company by the key employee
• Can help provide resources to find a suitable replacement

2. Co-Director Insurance

• What is Co-Director insurance for?  Co-Director Insurance makes funds available to buy a director’s shares from their successor when the director dies.

• Who takes out Co-Director insurance?  The directors themselves

• Why take Co-Director insurance out?  Surviving directors can lose control if a deceased director owned over 50% of the company.

The deceased successor:

• may be unfamiliar with the business;
• could have cash flow problems after losing the deceased’s income.

Co-Director insurance benefits:

• Gives company directors peace of mind
• Means the deceased’s successor does not have to become involved in the business
• Can also cover a directors becoming seriously ill

3. Partnership Insurance

• What is partnership insurance for?  It protects the financial security of a business partnership by compensating a deceased partner’s estate for their share of the partnership.

Partnership insurance benefits:

• Gives surviving partners the funds to repay the deceased partner’s estate
• Means the deceased’s successor does not have to become involved in the business
• Can also cover a business partner becoming seriously ill

You can’t predict the future but you can plan for it

While we all hope and often believe it won’t happen to us, the reality is that business owners and their families throughout Ireland are affected by these events each year.

If you would like to find out more contact Quintas Wealth Management on 021 4641400 or email info@qwm.ie

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