Home |
Ask a Question |
Insurance Glossary |
Understanding Risk & Insurance |
Benefits |
Get a Quote |
Contact
Home |
Ask a Question |
Insurance Glossary |
Understanding Risk & Insurance |
Benefits |
Get a Quote |
Contact
The loss of a key person can put immense pressure on the remaining owners and senior partners. Apart from increased workloads and potential loss of profits, you may have the added burden of financial commitments such as outstanding business loans. Lenders often require this cover and sometimes may have asked you for personal guarantees – perhaps using your own home as security.
As Directors you may also have made loans to your company, either through cash injections or by leaving salary, bonus or dividends within the business. Director loan accounts are repayable to the estate of a person who dies and in Partnerships similar loan accounts to individual partners may also need to be repaid on death. Even in the event of critical illness, the repayment of a loan like this would give the person involved much needed personal financial security.
Business Loan Protection can solve these financial headaches by providing the amount of cover needed to repay these loans at a time that is very difficult emotionally.
Michael & Christine own a one practice Optometrist business. A major local competitor has recently decided to retire and they Michael and Christine see this as the ideal moment and opportunity to expand their business.
Their bank are willing to lend them £300,000 to help facilitate this purchase over a period of 15 years. The bank stipulate that the loan would have to be repaid immediately if Michael, the key figure and driving force of the business, were to die within this period.
The loan was made and used to buy the other Practice. Eighteen months later, Michael dies suddenly from a heart attack and the bank call in the loan.
With business loan protection in place Christine and the Business are able to guarantee sufficient funds to repay the loan, on Michael’s death.
Without business loan protection the Business must repay the loan on Michael’s death using finance from its own resources. Unfortunately, they don’t have the available funds to repay £300,000 and cannot get a further loan, due to the loss of their inspirational leader, Michael. Their only method of raising the necessary capital is to sell the Practice that they had bought, possibly below market value, and could mean restructuring and downsizing the business. At worst the business could fold.
How much cover you require, and the analysis of what is specific to your business is crucial in ensuring that you have the right cover at the right time for your business. We have experts who can listen and work with you and your legal advisers to help identify what is important and assist in putting a plan in place that is tailor-made for you and your business that will ensure your business continues to survive even in the most difficult of circumstances.
Optometry Wales is offering a complimentary Business Protection/Key Person review to all Optometry Wales members. To take us up on this offer please...
Contact Us →We will assist you in considering what cover is right for you, the indemnity period required, and how to calculate the correct figures to ensure adequate insurance is in place.
Optometry Wales Insurance Services is happy to discuss all the issues raised in this Newsletter with any member. Please do not hesitate to contact us should you which to discuss any aspect in more detail.