Why should you protect your partnership?
Ensuring that you and your business partners have partnership protection insurance means your interest in the business is safeguarded in case anything happens to one of you.
If one of your partners dies, there is a danger that their share of the business could be passed to a beneficiary with no interest in the business or with ambitions at odds that may harm it. Business partnership protection insurance is designed to pay out sufficient funds on the death of a partner so that the surviving partners can buy out their share or compensate their dependants for the loss of the will benefit.
Protection can also mean that if a partner becomes seriously ill and they decide to leave the business they will be compensated with a lump sum.
The right scheme will work to ensure that, in the event of any partner becoming ill or dying, the business is not automatically dissolved, there is protection against any hostile or indifferent beneficiaries and business continuity is safeguarded. It will also mean that the deceased partner's assets are not at risk of being sold to pay for their interest in the business. Lastly a policy will help you and your partners' confidence in the business.
Any scheme should include insurance, agreements and trusts to protect the business against the impacts of a partner's death or illness, specifically:
- A level of life cover that will enable the surviving partners to buy another partner's share in the business
- An appropriate arrangement to enable the partnership to continue and to compensate the deceased's dependants
- An agreement plan in the event that a partner dies, retires or can't work because of illness
- Agreement over partners' benefits
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This article (Partnership Protection) is intended to provide a general appreciation of the topic and it is not advice.
For more information please contact Nurture Financial Planning Ltd on 01603 673502 or email firstname.lastname@example.org and we will be happy to assist you.
Article expiry: 05 Apr 2018