Business Assurance

There are many types of business insurance available. It is very important that you seek independent financial, tax and legal advice before choosing cover that would suit your Company.

Key person insurance

Key person insurance is simply a life insurance policy on the key person in a business. A key person is defined as a person crucial to a business. You need to consider key person insurance on those people.

Here is how key person insurance works: A Company purchases a life insurance policy on its key employee(s), pays the premiums and is the beneficiary of the policy. If that person unexpectedly dies, the Company receives the insurance benefit. The reason this coverage is important is because the death of a key person in a small Company can cause the immediate demise of that Company. The purpose of key person insurance is to help the Company survive the blow of losing the person who makes the business work.

The Company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner. In such tragic situations, key person insurance gives the Company some options other than immediate bankruptcy.

If the Company is a sole proprietorship and employs just you and no other employees or has no other people who dependent on it, then key person insurance is not necessary. You will note that we have not mentioned your family. Do not confuse key person insurance with personal life insurance. If you have a spouse and/or children who depend on your income, then you should have personal life insurance for that purpose.

Corporate Co-Director Insurance

Co-Director Insurance makes funds available to buy a director's shares from their successor when the director dies. Surviving directors can lose control if a deceased director owned over 50% of the Company. The Premium is paid by the Company and the benefits is paid back to the Company and is used to buy back its own shares from the deceased’s next of kin. This cover gives Company directors peace of mind knowing the Company is secure and means the deceased's successor does not have to become involved in the business.

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