Business
Keyman
Partnership Assurance
Company Director Share Purchase.
When considering the above 3 contracts, you are looking at a “what if” scenario. Simply put "what if one of your top employees dies?" or "what if your Business partner should die?"
What happens at that point, and how will it affect your business?
The aim of Keyman Assurance is to alleviate financial hardship by providing the company with a lump sum. This can be used to offset possible losses to the company in the case of a keyperson dying or it allows partners to buy the shares from the surviving spouse.
Keyman
- This is used to protect the business from the death of or a critical illness affecting a key person. It provides a cash lump sum for the business to enable it to survive. It can also provide funds allowing you to recruit a suitable replacement. Usually a Renewable Term or a Whole of Life policy is used. These can include critical illness cover.
The level of cover can be up to 5 times salary. A keyman must be identified as such, a top Salesman, Company Accountant or a junior partner. Someone whose loss would affect the company’s income.
Partnership/Share Purchase
- This policy protects the interests of co-owners or partners in the event of death.
The owners/partners declare how much each share is worth, usually calculated by accountants, and a combination of insurances and legal documents are put in place. On the event of a death, a cash lump sum is paid out to the spouse of the deceased, ensuring the remaining partners/owners can run the company without disruption or interference.
The background to the contract can be quite complicated but the concept is very simple.