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Life Assurance
Friday, June 1, 2007
Protecting the owners

Have you ever asked your business clients what would happen to their company if one of the business owners were to become disabled or even worse, die? When it comes to key staff, could they afford to replace a staff member with specialised skills?

As a financial adviser, if you know these scenarios could cripple your client’s business, then you should also know that they need business assurance.
Starting a business can be daunting when you consider the financial risk this entails. But unfortunately, most business owners feel they don’t have the money, time or energy to sift through all the assurance options available.
“It’s vital for financial advisers to educate their clients on the financial risks involved with starting up their own businesses,” says Liberty Life Head of Group Risk and Solutions, Justin Garbutt. “Many small business owners are faced with steep start up costs and cash flow constraints and therefore don’t buy business assurance. Things can, however, go wrong all too quickly and when they do it’s often a case of too little, too late.”
When starting a business, owners should isolate risk areas and take the necessary cover against them.
Three key risk areas your clients should be considering include that of personal liability, buy and sell agreements and of course, employee cover.
Clients who start their own businesses often need to take out a loan to finance its further growth. If they’re not able to pay it back due to disability or even death, they might be forced to sell some of their assets to cover the amount. And what if they are the surety on the loan? Their estate could be frozen until the debt has been paid off, placing their new business in a frustrating state of limbo.
Liberty Life’s business cover means that any personal liability could be settled in full and the financial resources of the business will not suffer undue strain.
Your client could be considering joining up with a partner or running a business on a co-owner or partnership basis, which comes with risks of its own. Liberty Life provides a framework agreement that lets business owners buy the interest of fellow co-owners and stipulates that the first to die will sell their interest to the surviving co-owners.
And then there are the people: key people create, steer and drive successful enterprises. But the million-dollar question is could a business survive if it were to lose such a valuable asset? The solution is to insure the business against the loss of a key person, which will give the company the necessary cash on-hand to recruit and train a replacement.
Benefits of Liberty Life’s Key Person Insurance solution include cover for loss in profits as well as for the downtime incurred during this process.
As part of its ongoing aim to empower financial advisers when it comes to the benefits of business assurance, Liberty Life has launched a Business Needs Calculator. This helps analyse the correct cover for individual clients in a simple and easy to explain manner.

Copyright © Insurance Times and Investments® Vol:20.5 1st June, 2007
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