One of the greatest risks to any business, but particularly a small business, is the critical illness or death of an owner or key person.
Few business owners have even considered the potential issues let alone arranged sufficient cover in place to protect themselves.
They may have take steps to protect themselves and their families, but how many business owners are fully aware of the options available to safeguard their business when the owner unexpectedly becomes critically ill or dies?
Also, there may be employees who are critical to day-to-day operations, and it can be hugely detrimental to the profitability and even the viability of a business if they died or became ill.
A business may need to repay outstanding commercial debt to improve its financial
position, at a time when it may lack cash reserves, or the ability to borrow more.
It may also need further funds to replace the resulting loss of profits due to the absence of a key person. Alternatively, the business could use these to pay for the recruitment and training of a replacement.
Where a business is owned by two or more people, the remaining owners may need to buy out the interest of a critically ill owner.
In the event of an owner’s death, they may also want to compensate the bereaved family for the value of their shares in the business. In either event, they will need capital, which can be provided by insurance.
Business protection policies are designed to protect the owners of a firm and their families against the impact of unforeseen circumstances.
