Commercial debts, key people, shareholders, partnerships and overheads. If something happens to you, what happens to them? Business people have no issue insuring their commercial premises and their commercial assets, yet they do not insure against the loss of human resources.
Business Debt Protection
Intended to repay any overdrafts or term loans that have been guaranteed by the Principal of the Company. Guarantees DO NOT die with the Principal, they will continue to hold the Estate liable until such time as all debt has been repaid. This can also include contingent debt such as guarantees to third parties, unexpired lease guarantees, i.e. if you have commercial premises on a rental of $25,000 per annum on a four times four renewal basis supported by a Personal Guarantee, you effectively have a potential liability of $100,000 on that.
Key Person Protection
If your business is dependant upon a few key people what would happen to your business in the event of either the permanent or medium to long term loss of that Key Person? Will sales decrease, can you deliver your contracts, who will run the company? What financial impact will this have on the business? These are all questions to ask yourself or your Board.
Key Person Insurance is effectively an extension of liability and business interruption insurance. A Key Person policy will provide a lump sum or monthly payment (or both) in the event of a Key Person suffering a serious illness, a permanent disability, or an untimely death. The funds will help your business maintain revenues and find and pay for a suitably qualified replacement to take over in the absence of the Key Person. This ensures that if and when a Key Person is able to return to work there is still an operational and profitable business to return too.
Shareholder Share Protection
If you are an owner of a limited liability company, you may well have other shareholders in the business whose rights are guaranteed under The Companies Act. In the event of the occurrence of death, trauma or total and temporary disability of a shareholder, are you ready to deal with your fellow shareholders’ accountant or lawyer?
We can show you how to overcome this problem to ensure that the remaining shareholders retain control and that the family of the affected shareholder are given a fair value for the shares in the business.
Similar to a Shareholder Share Protection Scheme but intended to protect the partnership whether that be two partners or multiple partners.
Business Overhead Protection
In the event of a total but temporary disability of yourself, (or possibly one of your key personnel) how do you ensure that your business can continue to meet all its financial obligations? Whilst you personally may be in receipt of an income from an income protection policy who will generate the income to pay the rent, the rates, the insurance, the business debt, the lawyer, the accountant etc? If you were suddenly to be removed from the business for six or nine months, would the business survive?
“40% of disabilities are due to disease or illness, 34% are due to accident or injury. However only 5% of the disabilities lasting six months or more were related to accidental causes.” Source: NZ Health Information Service 2001, NZ Life Underwriting Magazine October 1987.