Partnership Protection Insurance27 July 2019
Do you have partners in your business? Have you got a safety net in place in case disaster strikes? Planned Cover’s Sherren Hepburn takes a look at partnership protection insurance.
It really does seem that the insurance options available to you are endless and, as a result, it can be pretty easy to just dismiss those you are less familiar with as unnecessary. However, when you run your own business, it’s important to do your due diligence where insurance is concerned as much as you would with anything else related to your business.
What is partnership protection insurance?
If you have a small business with one or more partners then partnership protection insurance provides a “safety net” of sorts in the event that one of the business partners suffers a serious illness, becomes permanently disabled or passes away.
In the event of death, partnership protection insurance enables the other partner/s to buy out the deceased partner’s share of the business from those who inherit it. In the event of a partner suffering an illness or disablement, such a policy provides the other partner/s with the funds to buy out the incapacitated partner’s share directly from them.
In essence, partnership protection insurance enables a business to continue operating should the worst happen.
What are the key things to consider?
Partnership protection insurance is one of those policies that requires you to consider things that are not at all pleasant. Having to consider the possibility of illness, permanent disablement or death befalling you or your partner/s is particularly confronting. However, having a plan in place should something like that happen is all part of being a responsible business owner. Such a plan may or may not involve partnership protection insurance, but in deciding if such a policy is relevant to your business, ask yourself the following questions:
- If one of the partners in your business were to become permanently disabled, ill or pass away, would the business survive?
- If a partner in the business were to pass away, who would own his or her shares? Would it be that partner’s family or someone else?
- Would you and any other partners be comfortable working with the person/people who inherit a deceased partner’s shares, and would you be comfortable with them being a partner in the business?
- If something were to happen to one of the partners in your business, would the other partner/s be able to afford to pay him or her out?
- If something were to happen to one of the partners in the business, would his or her family survive financially?
These are the questions you need to be asking yourself when making an evaluation about the relevance of partnership protection insurance to your small business.
Do you need it?
As with any insurance policy, you should examine the pros and cons as they relate to your particular situation. If the added security partnership protection provides has piqued your interest, discuss it with your partners and evaluate the peace of mind it will provide versus the added cost. Consider your financial situations as individuals, as well as the economic viability of your business if something were to happen to one of you.
Sherren Hepburn is the National Operations Manager for Planned Cover. She has a Bachelor of Business majoring in Marketing/Human Resources and started her career in the insurance industry as a Business Graduate in 1997. Having worked in numerous roles in both Sydney and Melbourne, Sherren enjoys the challenges of an industry where negotiation skills and client care are key to a rewarding and successful career.
Planned Cover is an ACA Corporate Sponsor. Planned Cover can assist with pricing and policy details for partnership protection insurance.