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Why do business clients need insurance?
Smooth sailing in a business is hard enough without adding the complications of injury, illness or even the death of a business partner or key person.
The probability of at least one partner dying before the age of 65 for a two-partner business structure is a significant 34% climbing to 71% if your business has six partners. And the chance of a partner becoming disabled is higher with 51% likelihood for a two-partner business structure, and 88% for a business with six partners.That’s why every business should include business insurance as a matter of choice.
| Type of business structure |
Concerns for the business owner |
How insurance can protect the business |
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| Sole Proprietor |
- Unlimited personal liability for all of the debts of the business.
- Business creditors can claim against personal assets.
- Cash flow starts and stops with the individual. Salary for personal needs and money to pay business expenses is dependent on the skills and expertise of the individual, and their ability to work.
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Insurance policies can provide money to:
- Pay out debts in part or full
- Pay the regular, fixed ongoing monthly expenses
- Replace the individuals’ income if they are sick and can’t work in the business.
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| Partnership |
- Joint and several liability for all of the business debts.
- Business creditors can claim against the partner’s personal assets.
- Cash flow is usually dependant on the skills and expertise of the partners or key employees. Salary for personal needs and money to pay business expenses relies on the ability of the partners or key employees to work and generate revenue.
- Finding money to buy out a partner if they die or depart the business due to server illness/injury.
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Insurance policies can provide money to:
- Pay out debts in part or full
- Pay the regular, fixed ongoing monthly expenses
- Replace the individuals income if they are sick and can’t work in the business
- Buy out a partner upon their death or server illness/injury.
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| Company |
- Access to funds for business growth is usually secured by personal assets of the business owner.
- Inability to repay debt can lead to the loss of the family home.
- Business revenue can be heavily dependent on key employees or owners, and their contacts, skills and experience. The inability of these individuals to work at full capacity can severely impact the business.
- Finding money to buy out a partner if they die or depart the business due to server illness/injury.
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Insurance policies can provide money to:
- Pay out debits in part or full
- Replace the revenue generated by key employees or business owners if they are sick and can’t work in the business
- Buy out an owner upon their death or server illness/injury.
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