Memo To Myself I Need Keyman Insurance

Memo To Myself I Need Keyman Insurance



Memo to​ myself – I​ need Keyman Insurance
Last month I​ had to​ drive down to​ London .​
I​ don't like driving at​ the​ best of​ times but the​ rain,​ spray and heavy traffic on​ the​ M1 made conditions difficult .​
Radio 2 kept me company and the​ heater kept me warm .​
Then I​ hit that queue - six miles solid and I​ was soon an​ hour behind schedule .​
They were still clearing up the​ accident when I​ got there .​
It was nasty .​
a​ lorry and what was left of​ two cars .​
Made me think,​ after all that could have been me .​
Yep,​ my life insurance is​ up to​ date and my Will was renewed only last month .​
The family would be well cared for and the​ mortgage repaid .​
Had I​ missed anything?
The business .​
What would happen to​ that? We have two directors,​ 7 employees,​ an​ overdraft and lots of​ insurance .​
Public Liability,​ professional indemnity,​ vehicles and stock are all insured .​
We even have legal protection insurance .​
Had I​ missed anything? I​ got to​ thinking .​
Thank goodness it​ wasn't George in​ that accident .​
a​ great guy and he's been with us five years .​
He's our top salesman .​
There again what if​ it​ had been my co-director who also owns 50% of​ the​ business? What would be the​ repercussions on​ the​ business?
Sales down,​ profits down,​ bank phoning all too politely to​ ask about the​ Directors guarantee on​ the​ overdraft .​
Then I'd have to​ try and buy his shares .​
I​ wouldn't want someone else to​ get hold of​ those .​
At some stage I'd have to​ recruit someone of​ his calibre to​ continue the​ company going forward - that wouldn't be easy! And recruiting top people doesn't come cheap .​
That's more time and more money .​
The personal problems …… the​ repercussions ……. .​
the extra work ……… the​ extra stress ……. .​
Oh heck,​ I​ don't want to​ think about it​ all .​
Quickly,​ switch over to​ Radio 1 .​
Does all this ring alarm bells with you? 95.2% of​ UK businesses employ less than 10 people and these are precisely the​ organisations most at​ risk from the​ impact of​ severe illness or​ death of​ a​ key person .​
The risks of​ a​ key person being stuck down with a​ long term illness or​ death are real .​
1 in​ 5 men suffer a​ critical illness before their normal retirement age .​
Then there's the​ M1 .​
The fact that it​ hasn't happened so far might just mean your business has just been lucky .​
Now to​ those actuarial boffins in​ insurance companies,​ risk and luck are flip sides of​ the​ same coin .​
And they can provide insurance cover for most risks .​
After all they too want to​ increase sales .​
But they're scratching their heads about Keyman Insurance .​
Most of​ Britain's 4.1million small businesses should have it​ but few do .​
What can it​ do? It can be structured to:
Provide an​ income stream to​ the​ company whilst the​ key person is​ incapacitated (compensation for the​ lost contribution from the​ Keyman)
Provide a​ lump sum to​ the​ business in​ the​ event of​ death (pay off the​ overdraft or​ simply bolster cash flow?)
Provide money for remaining shareholders to​ buy the​ shares from the​ original shareholder or​ their estate
You'll need to​ talk to​ a​ Financial Adviser about these issues but they are all insurable .​
Can your business afford to​ take a​ risk it​ doesn't need to?
Memo to​ myself – get Keyman Insurance!




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