If you are in business, here are a couple life/disability insurance concepts to consider –
Businesses begin without much of a value, but if it begins to experience some success and the value of the business greatly increases, the partners need to have a plan to handle a health disaster. If a partner is no longer able to contribute due to injury, illness or even death, there will need to be a payout for their shares in the business. But will the healthy one have the money? Or will the distraught widow(er) accept the amount offered? Who wants to negotiate with a distraught widow(er) anyway? There are many permutations of where the health of partners can blow a business up. But there are also some common solutions using a solicitor’s agreement and insurances to back it up.
Key Person Cover
Although this expression is bandied around a lot, it is only required in circumstances where multiple investors/owners of a business are vulnerable to a major loss if a key figure in the business cannot contribute anymore, e.g. would Apple be a huge corporation today if Steve Jobs had wrapped his Porsche around a telegraph pole in 1980? It’s simple for a business to own some cover on the body of the Key Person to protect the entity’s value and fund the search for a replacement.
If you have a team of people you care about and the culture of the business is great, your approach to a serious illness amongst the staff can become a big test of your leadership. If a staff member gets diagnosed with something horrible, chances are all their annual leave and sick pay is going to get used up. Do you ring them with that news? Are other team members hoping you find some way to continue funding them? Are you free to replace them? If they had their own income protection policy, then any moral obligation to help is passed over to an insurer. Most large businesses have a group policy for all staff, but that’s impractical for a small business. What you can do is to encourage the concept, or even get an adviser in to do a presentation, thereafter leaving it up to them how they wish to protect their future income.
So many things to consider in running your own business, sorry to add some more – I suppose that’s why it’s not for everyone.