Memo to Myself - I Need Keyman Insurance

 


Visitors: 401

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!

Michael is the chief editor for Scrouge Life Insurance who offer life insurance quotes as well as much more.

Futher reading on Trust and life insurance
Futher reading on mortgage life insurance

(613)

Article Source:


 
Rate this Article: 
 
AIG - Is Our Auto Insurance, Life Insurance, Health Insurance and Title ..
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Could Keyman Insurance Save Your Business?

by: Sean Horton (July 10, 2008) 
(Insurance/Commercial)

Keyman Insurance - Protect Yourself Against Some of Your Biggest Businesses ..

by: Michael Challiner (December 16, 2005) 
(Insurance)

How to Write a Better Memo

by: Brian Konradt (January 04, 2007) 
(Writing and Speaking)

Memo Okur Is Out Of His Slump

by: Nigel Kerry (April 17, 2007) 
(Arts and Entertainment)

Memo: Sustaining Growth in Your Business

by: Bob Lodie (May 14, 2005) 
(Business/Strategic Planning)

Promotional Memo Holders Subtle Advertising at Its Best

by: Matt Franks (July 08, 2008) 
(Business/Marketing)

Ferries HD, MetaTrader 5 and Memo Gea - Try These Top Mobile Apps in 2012

by: Steve August (April 12, 2012) 
(Computers and Technology/Mobile Computing)

HontheP: Childhood Is Innocence, Cute Teen Sayings Website Brings You The Most ..

by: Maria Jack (February 23, 2010) 
(Kids and Teens)

Boom! How & Why Internet Marketers Are Discovering MSI Sonic Memo & How .

by: J Mercado (December 11, 2005) 
(Internet and Businesses Online/Audio Streaming)

AIG - Is Our Auto Insurance, Life Insurance, Health Insurance and Title ..

by: Bob Randooke (December 11, 2008) 
(Insurance)