Partnership Insurance Many small businesses are run by two or more individuals working together, either as: A Partnership As co-directors and shareholders of a private limited company In either structure the sudden death of a partner can cause immediate and significant financial problems for the surviving partners. It can also pose uncomfortable situations for surviving partners and relatives of the deceased. Take the following example; What if the next of kin of a deceased partner wanted to come into the business with the surviving partners, who might not want this for a variety of reasons. Even if the next of kin are willing to sell their share of the business back to the surviving partners, the surviving partners simply may not have the liquid capital or the borrowing capacity available to do so at the time. With Partnership Insurance an agreement is designed to meet the needs outlined above and provide security in certain circumstances. There are two main structures associated with Partnership Insurance; Buy/Sell Agreement between the partners, under which on the death of a partner the deceased partner’s next of kin are bound to sell and the surviving partners bound to buy, the share of the deceased partner. To ensure that the surviving partners are in a financial position to complete the transaction, each partners life would be insured for a sum assured equal to the estimated value of their share of the business, in order to provid sufficient liquid capital on death for the surviving partners. Obviously the structure would be chosen on a case by case basis. If you think Partnership Insurance might be of interest to you call today for a FREE consultation.
