Business Protection
This deals with protecting your business from the adverse financial effects of the death of a key person, partner or shareholder. Business protection can be especially important to smaller companies whose reliance on key individuals for profit may be greater than large corporates.
There are two main types of business assurance, key man and partnership/director share purchase.
Key Man
This is used to inject a lump sum of cash into the business in the event of the loss of a 'key person'. A key person may be a top salesman, or a key designer in a design company - someone whose death would have a direct and adverse effect on the company's income. The usual solution is a term assurance policy whose sum assured should be worked out with your financial adviser.
Partnership/Director Share Purchase
This deals with protecting the families and co-owners in the event of the death of one of the partners/directors. Each party agrees beforehand the value of his or her share and a combination of term assurance policies and legal documents are put in place to ensure that in the event of a partner or shareholders death, the remaining co-owners have a sum in place to buy out the family of the deceased for a fair sum.