Month: July 2018

July 2018

Insurance is a fundamental component in establishing and running a business. Most business owners are likely to take pains to ensure that they arrange insurance on their buildings, cars and equipment, and are covered for ‘loss of profits’ in the event of a catastrophe such as a fire or flood. Yet many businesses do not insure their greatest asset – the key people who ‘make the business happen’, for life cover. For relatively low costs, it is possible to help the business survive should the worse happen and one or more of the critical people become critically ill or die.

Who are your key people?

A key person within a company could be anybody who is regarded by the business as having a significant impact on the financial position of the company, and whose loss is likely to cause the businesses owners an urgent need to act swiftly to ensure continuity. This could be anyone whose role is “key” to the business because of their expertise, knowledge or contacts. They could also be crucial because of importance to the business; for example, if they own a significant amount of shares in the business. Also, business owners often lend money to their company, and these loans can be taken into account, as well as the servicing of ordinary bank borrowings such as overdrafts, and property loans.

Put simply, a key person assurance is a life or critical illness insurance policy on a ‘key’ person or persons within a business. In the event of death, serious illness or injury, the business can receive a fixed amount of money to buy the business some time to recover. The funds may be used to cover the cost of recruiting and training a new key person, providing temporary staff, or to compensate the business for lost revenue.

Further benefits

If a key person should die, banks are usually in a position to quickly vary the terms for short term borrowings such as overdrafts. With Key Person cover, the business can be in a position where it is able to inject a capital sum at a time of uncertainty, which would give considerable reassurance to creditors, helping the prospects for continuation into the future.
This valuable protection can be secured at relatively low costs.

How we can help

We are specialists in this field and can assist you with all aspects of the necessary arrangements. Contact Graham Smithson, Senior Consultant at Hanover Financial Management, to arrange an initial discussion, without obligation.

June 2018

Setting up a business is an exciting time, and while looking ahead at the opportunities that are opening up, perhaps the last thing on most entrepreneurs’ mind is the death or severely diminished health of either themselves or one of their business partners.

If you were to lose the contributions of a key business partner to ill health or worse, the impact on the workings of your business could be enormous. Not only would you lose the companionship of a business partner and possibly a friend, you would also lose their valuable expertise. Moreover, you could lose a share of your company to the spouses or beneficiaries of their estate, who may only be interested in the fiscal release-value of their inherited shares, and have little or no concern about the business’ future.

Steps to take

The answer is to think seriously about setting up some level of shareholder or partnership protection. This could help to safeguard you by enabling existing partners or company directors to purchase business shares from a deceased’s family if they should die or suffer a critical illness which prevents them from working. It is available to individuals in either a limited company, LLP or a partnership, and combined with good shareholder and ‘cross option’ agreements, can help to ensure continuity by providing insurance funds that you and surviving business partners could use to retain control of your firm should the worst happen.

Options

There are a number of ways to go about taking out these insurances. Each principal could take out a policy on each of the others; this is a popular approach when there are just two partners involved in a business. However, matters can become complicated when there are three or more partners involved.

There can also be inequitable situations if the age difference between the business partners is significant, because the cost of insurance for older persons will be much higher. For three or more partners therefore, it is a common approach for each business partner to establish a policy on their life and place it in trust for the benefit of either the company itself or in appropriate shares to the other business partners/directors. If the worst should happen, the remaining shareholders can then use the funds received from the insurance to fund the purchase of the deceased’s shares from their family or estate and redistribute them amongst the surviving business partners according to the Trust and ‘Cross Option’ Agreements.

Is it worth it?

The costs of protection can be relatively low for life cover only, and for business people, is as important as arranging their own personal Will and Lasting Power of Attorney. These issues are equally important for long established businesses where frequently we find that no regular reviews have been undertaken on the business protection arrangements and circumstances, particularly the value of the business, have changed.

How we can help

We can help you find the best option for you and your business and assist with all the arrangements, setup and management. In the first instance, contact Graham Smithson, Senior Consultant at Hanover Financial Management Limited.

Month: July 2018

July 2018

Insurance is a fundamental component in establishing and running a business. Most business owners are likely to take pains to ensure that they arrange insurance on their buildings, cars and equipment, and are covered for ‘loss of profits’ in the event of a catastrophe such as a fire or flood. Yet many businesses do not insure their greatest asset – the key people who ‘make the business happen’, for life cover. For relatively low costs, it is possible to help the business survive should the worse happen and one or more of the critical people become critically ill or die.

Who are your key people?

A key person within a company could be anybody who is regarded by the business as having a significant impact on the financial position of the company, and whose loss is likely to cause the businesses owners an urgent need to act swiftly to ensure continuity. This could be anyone whose role is “key” to the business because of their expertise, knowledge or contacts. They could also be crucial because of importance to the business; for example, if they own a significant amount of shares in the business. Also, business owners often lend money to their company, and these loans can be taken into account, as well as the servicing of ordinary bank borrowings such as overdrafts, and property loans.

Put simply, a key person assurance is a life or critical illness insurance policy on a ‘key’ person or persons within a business. In the event of death, serious illness or injury, the business can receive a fixed amount of money to buy the business some time to recover. The funds may be used to cover the cost of recruiting and training a new key person, providing temporary staff, or to compensate the business for lost revenue.

Further benefits

If a key person should die, banks are usually in a position to quickly vary the terms for short term borrowings such as overdrafts. With Key Person cover, the business can be in a position where it is able to inject a capital sum at a time of uncertainty, which would give considerable reassurance to creditors, helping the prospects for continuation into the future.
This valuable protection can be secured at relatively low costs.

How we can help

We are specialists in this field and can assist you with all aspects of the necessary arrangements. Contact Graham Smithson, Senior Consultant at Hanover Financial Management, to arrange an initial discussion, without obligation.

June 2018

Setting up a business is an exciting time, and while looking ahead at the opportunities that are opening up, perhaps the last thing on most entrepreneurs’ mind is the death or severely diminished health of either themselves or one of their business partners.

If you were to lose the contributions of a key business partner to ill health or worse, the impact on the workings of your business could be enormous. Not only would you lose the companionship of a business partner and possibly a friend, you would also lose their valuable expertise. Moreover, you could lose a share of your company to the spouses or beneficiaries of their estate, who may only be interested in the fiscal release-value of their inherited shares, and have little or no concern about the business’ future.

Steps to take

The answer is to think seriously about setting up some level of shareholder or partnership protection. This could help to safeguard you by enabling existing partners or company directors to purchase business shares from a deceased’s family if they should die or suffer a critical illness which prevents them from working. It is available to individuals in either a limited company, LLP or a partnership, and combined with good shareholder and ‘cross option’ agreements, can help to ensure continuity by providing insurance funds that you and surviving business partners could use to retain control of your firm should the worst happen.

Options

There are a number of ways to go about taking out these insurances. Each principal could take out a policy on each of the others; this is a popular approach when there are just two partners involved in a business. However, matters can become complicated when there are three or more partners involved.

There can also be inequitable situations if the age difference between the business partners is significant, because the cost of insurance for older persons will be much higher. For three or more partners therefore, it is a common approach for each business partner to establish a policy on their life and place it in trust for the benefit of either the company itself or in appropriate shares to the other business partners/directors. If the worst should happen, the remaining shareholders can then use the funds received from the insurance to fund the purchase of the deceased’s shares from their family or estate and redistribute them amongst the surviving business partners according to the Trust and ‘Cross Option’ Agreements.

Is it worth it?

The costs of protection can be relatively low for life cover only, and for business people, is as important as arranging their own personal Will and Lasting Power of Attorney. These issues are equally important for long established businesses where frequently we find that no regular reviews have been undertaken on the business protection arrangements and circumstances, particularly the value of the business, have changed.

How we can help

We can help you find the best option for you and your business and assist with all the arrangements, setup and management. In the first instance, contact Graham Smithson, Senior Consultant at Hanover Financial Management Limited.

Key person assurance – protecting your most important assets

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July 2018 Insurance is a fundamental component in establishing and running a business. Most business owners are likely to take pains to ensure that they arrange insurance on their buildings, cars and equipment, and are covered for ‘loss of profits’ in the event of a catastrophe such as a fire or flood. Yet many businesses

Protecting your business share

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June 2018 Setting up a business is an exciting time, and while looking ahead at the opportunities that are opening up, perhaps the last thing on most entrepreneurs’ mind is the death or severely diminished health of either themselves or one of their business partners. If you were to lose the contributions of a key