Your client may have already taken steps to protect their business against major catastrophes and put together a business continuity plan to ensure its future if things go wrong.
The death or critical illness of a key employee or a co-owner can have a major impact on the business. It could lead to:
Without the cash to buy out a co-owner, the business could even end up in someone else’s hands.
Business protection is a type of insurance that helps protect a business against possible financial losses when illness or death affects the owners or their employees. By including business protection in a firm’s business plans, owners can help the business to survive and continue trading under seriously challenging circumstances.
Business protection is different to personal protection because it reflects particular business needs. For example, the insurance could cover the life of another person such as a key employee, to protect against significant loss of earnings should they die or while they recover from serious illness. Business protection can also be used to ensure the ability of business owners to repay a loan in similar circumstances.
There are protection solutions available for the specific needs of different types of business, be it a limited company, sole trader, partnership, or limited liability partnership (LLP).
There are different ways of approaching business protection, particularly for partnerships and shareholders. Depending on the circumstances, it is possible to take out a ‘life of another’ plan or an ‘own life’ plan, which is then written into a business trust.
AIG provides four main solutions: