Women drivers face 25% increase in car insurance premiums in December 2012November 7, 2012
Number of new mortgages issued during third quarter up 24% but overall figures still near 40 year lowNovember 14, 2012
Half of Business Directors Unaware of Business Protection Assurance
According to a new survey from Caledonian Life the majority of business directors and partnerships leave their business vulnerable to the financial consequences of the death of key person in the business, by not having provisions in place to deal with this situation. The Protection experts say that one of the most critical risks to a small business namely, the death of a key member of staff, is being overlooked by many – until it’s too late.
The survey of directors indicated that almost 50% of business leaders haven’t considered putting business assurance* in place because they are simply unaware of its existence, while 40% of those that don’t have it in place, considered it unnecessary.
Joe Charles Marketing Manager of Caledonian Life commented, “We asked the question of these directors and partners because we strongly believe, that business assurance is not something that is always at the forefront of people’s minds, when they consider what is necessary to have in place to ensure the financial security of their business. The findings were in line with our beliefs. The death of a key person in a business can have unforseen and often very dramatic business consequences.”
Few business directors or partners may consider or are aware that the family of the deceased would probably inherit the deceased’s share in the business. As such, they will expect to be bought-out or participate and profit from the business on an immediate and on-going basis. With the current restricted access to credit, a buy-out of their share would seem an unlikely outcome – while the alternative could be that the deceased spouse would become engaged in the day to day running of the business – which is often very challenging or indeed, sometimes actually unworkable.
Caledonian say that without the necessary financial framework in place the deceased’s family could be left with other often insurmountable financial obstacles. For example, if a key member of staff has supplied the company with finances and suddenly dies, immediate repayment of the loan may be required by their estate. Similarly, if an individual has taken guaranteed loans on behalf of a company, such loans could be repayable on their death.
Joe continued, “There is there is an 89%**probability that, out of eight directors in a firm one will die before retirement. The risks are lower in smaller business, but the impact is even higher as there is huge individual dependence on key people. Your local Broker will be able to provide guidance and advice on the optimum strategies to help protect your business by putting solutions in place now, to help deal with the financial impacts of the unfortunate death of a director, partner of keyperson in their organisation.”