By Sharon Grubb, Financial Planning Manager at Smith & Williamson

The saying goes that in business, no one is indispensable. But business owners are often the exception to this rule.

So, it’s worth taking a moment to think about whether your business and family are protected from a worst-case scenario.

Running your own business may leave you little time to consider your financial future, but what would you and your family do if a critical illness such as a heart attack or stroke, forced you to be absent from work?

Given the problems of the current economy, key man insurance and business protection are even more important than in a more benign environment. Failing to address what could happen may have significant financial consequences for the business and those who rely on it.

Anyone thinking of protecting the future of their business should consider the following questions.

- What do you want to happen to your share of the business in the event of your premature death?

- Does the business have any loans outstanding that would need to be repaid if you die or cannot continue working? How would these be repaid?

- If you or someone you employ would be difficult or impossible to replace, how will the business cope financially if that person dies or is too ill to work?

You need to consider what the cost implications might be, whether any formal agreements need to be put in place and what funds would be available. If there’s a cash shortfall, protection may be needed. This might involve using insurance to provide a lump sum on death or diagnosis of a critical illness, payable to the business or the business partners.

Legal and General recently published research revealing that 43% of businesses have unprotected corporate debt. 39% of the respondents to their survey said that their business would fold within 18 months if one of the key people in the business suffered from a critical illness or died. Could this happen to you?

If you are one of these businesses, it’s not too late to take action.

To find out how you can protect your business or family in the event of a death or critical illness, speak to Sharon Grubb, Financial Planning Manager at Smith & Williamson. Call Sharon on 01722 434887 or email sharon.grubb@smith.williamson.co.uk

By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Article correct at time of writing.

Smith & Williamson Personal Financial Planning
A division of Smith & Williamson Financial Services Limited which is authorised and regulated by the Financial Services Authority

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