of businesses would cease trading in under a year if a key person died or became critically ill.
Source – Legal & General – June 2020
HAVE YOU CONSIDERED HOW YOUR COMPANY WOULD COPE IN THE EVENT OF THE DEATH OR SERIOUS ILLNESS OF ONE OF YOUR KEY EMPLOYEES, DIRECTORS/PARTNERS OR SHAREHOLDERS?
Legal & General’s research into this area has found that 40% of business owners expected business to fold within one year of the death or critical illness of a key person. 37% of businesses don’t have any share protection cover in place*.
If you are involved in a business, small or large, you will know that an integral part of the running costs includes protection of assets i.e. insurance in relation to buildings and contents, key equipment, stock, vehicles and public liability to name but a few.
The cost of each is accepted as absolutely essential to ensure a business is functioning within the right legal requirements and to provide backup should the “worst” happen.
There is no doubt that equipment, vehicles, location etc., provide the means by which a business can offer goods or services, but the real backbone of any firm is the people who make it successful and profitable.
For all business owners, when it comes to protecting the business the key considerations are continuity and succession. On the temporary absence or loss of a key person, business owners need to consider for how long (if at all) the business could continue to run efficiently and remain profitable. In addition to this, they need to consider what plans are in place to ensure business assets are valued correctly and passed to the right people.
There continues to be a need for companies to address this issue but through a lack of knowledge of the risk or understanding of the solutions available, this need for protection by many companies, is not considered.
Why do so many companies remain resistant when it comes to having the correct plans and procedures in place to ensure death or serious illness does not affect the daily running of the business?
Whether you are a limited company, sole trader, partnership or limited liability partnership, the threat of death or serious illness of a key person is very real and it doesn’t have to mean the end of a business you have worked hard to create and make profitable.
If you are a business owner and are considering continuity or succession planning, we can help with calculating the level of cover required how to set up the arrangement.
Please contact us for more details.
*Source: Legal & General, 2020.
*Neither Dylan Tierney nor PRIMIS Mortgage Network is responsible for any advice supplied by these specialists.
¹Wills and Trusts are not regulated by the Financial Conduct Authority.