How Can You Protect Your Business Partner?

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When a business partnership is formed, a few factors should be well planned out for before it is even launched. It is important to plan out early enough how the company will handle the death of an extremely skilled employee or a business partner. There are a few options available to choose from before these disasters hit you and your company. In the world of insurance, it’s of vital importance to have life insurance in cases where a company or partner depend on you.

Risks to Avoid

Do you ever sit and wonder what your company would go through if one of your partners suddenly died? I am sure it’s a risk many would want to avoid. When a business partner passes, the period is also accompanied by chaos as to whom do the assets he owned belong to.

The company is left to deal with the new partners, and if the original partner was highly skilled or was a key component strategically, then fear grips the other partners. There may be doubt as to whether without the partner the same level of quality will be maintained, and this leads then to an uncertainty as to whether the same level of credit shown will cease.

The company is left with very few options, and the remaining partners face the option of a sellout. These problems however just face the partner who never planned on this happening. No matter how old the company or partners are, the sooner you plan for this, the easier it will be for all the partners. If you don’t do this, you face the risks such as becoming partners with unqualified people, sell out your share of the business to avoid loss and maybe even a business liquidation.

If you need complete protection, then understand the factors that will affect how you select your insurance option. Your family needs protection. The insurance policy you choose needs to ensure that your family lives under financial stability. The second part is your company, for your family to enjoy security your company needs also to have the best policy. If your company depends on you, then the policy will be quite different than that of a casual business partner. The other partners need also to ensure that the other partners have a stable insurance policy before it’s too late.

These insurance policies used are designed to cater to the needs of the partners depending on what help the deceased partner was to them. The term insurance policy will most often be used when the partner supported loans or assets to the business. This insurance policy protects the other partner from the risk of debt. If the partner or a vital employee passes, the insurance policy taken will cater for the cost of the replacement process. The insurance policy also protects the other partners from delays or losses the company is hit with.

The price paid for a term insurance is a lot less than that of the permanent insurance policy. A few factors contributing to this include the unknown potential loss the company might face in the eventuality of sudden death.

Sourced from: GetSmarterAboutMoney

Image source: Thinkstock/Fuse

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