Running a business is challenging at the best of times. You spend a lot of time trying to improve your business and planning for the business’ future whether that includes purchasing equipment, employing highly skilled staff or sorting out your exit strategy.

8 years ago, Paul and Simon graduated together with engineering degrees. Simon headed overseas while Paul had saved sufficient money to start his own business.

Today Paul is doing well. He now employs six staff and has more work than he can handle alone. Simon recently returned from overseas and has bought into Paul’s business as an equal partner. This injection of capital has meant the business has been able to purchase their building (with some help from the bank). At the time of financing the building purchase, Paul and Simon’s bank manager requested they speak with their Adviser to develop a proper risk protection plan for themselves and their business.

After 3 meetings and a full report from their Adviser, Paul and Simon have each taken out SmartLife policies that include the Total and Permanent Disablement, Accelerated Trauma and Business Security Options. They have also identified two of their staff as 'key people' and as such have decided to insure each of them under Key Person insurance.

The SmartLife cover will provide a lump sum to the other partner should Simon or Paul die, allowing all debt to be repaid. Their Adviser suggested the inclusion of Total and Permanent Disablement and the Accelerated Trauma Option to provide enough funds for each partner to buy out the other partner’s share of the business should one of them become permanently disabled or suffer a major health problem. They have talked to their lawyer and put an agreement in place to ensure the insurance cover will operate as they intend.

Paul and Simon were also concerned about some of the things they had planned to do with the business in the future and the insurance needs these would create. The Business Security Option was included on their SmartLife policies so they may increase their life or TPD cover when they need to in the future without supplying medical evidence.

The two employees of Paul and Simon's business are critical to the successful running of the business - should they lose one (or both) of their key people due to them becoming totally disabled, having Key Person insurance means the business can claim financial assistance to help manage any losses the business may experience due to this loss. The payment could be used for such things as hiring temporary replacements or subsidising the medical costs etc.

Paul and Simon are very happy with their partnership arrangement. They have a business with strong growth prospects and a promising future, which is now well protected and well in place to cope with the health difficulties of key stakeholders


Disclaimer
The characters, Paul and Simon and their situation is fictional. If the people portrayed and their situation bears any similarity to any person or situation, past or present, this is both coincidental and unintentional.