Key Man InsuranceDoes your small or medium sized business rely on a small number of key people whose absence through illness or accident could have a serious financial impact and could even lead to ceasing to trade profitably or at all?
A Key Man Insurance Policy can be arranged to pay out (to the business) if through death or illness or injury one or more key individuals are unable to fulfil their duties. The business can use the sum assured to cover recruiting costs or lost profits.
This type of policy can be purchased by the business. The cost of key man insurance depends on the level of cover required and the term.
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Shareholder Protection Insurance and Cross Options Agreement
Shareholder Protection Insurance provides that in the event of the death of a shareholder the remaining shareholders are able to purchase the deceased’s shares. The cross option agreement is a shareholder agreement that provides the mechanisms for ascertaining the value of shares and ensures both that the firm is able to continue with clear arrangements for control whilst the family of the deceased are not forgotten.
The are pros and cons of this form of insurance. There are a number of ways of arranging it and there are some potential pitfalls. There are also potential taxation implications – both capital gains and income tax.
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Warning:
If premiums are not maintained then cover will lapse. Most Protection policies do not have a cash value, unless a valid claim is made’