Ifa brief issue 1 2014
2
Thomas Carroll Group PLC Pendragon House, Crescent Road, Caerphilly CF83 1XX t e w 029 20 86 95 31 [email protected] thomas-carroll.co.uk issue: How Safe is Your Business? Many people think that protecting a business involves insuring the premises, the contents and the assets. That’s true – it does. But when you think about assets, are you thinking about the material assets only, or are you also thinking about the human assets within the business? It’s the people that make a business run smoothly, and without them most businesses would have a hard time functioning. Just think where your business would be if you were diagnosed with a critical illness, or died. If you’re a partner of a small firm and one of your other partners dies, what happens to your business and their share? Who now owns that share of the business and where does that leave you? In many cases, when a director or partner dies, their share of the business passes to the family, who may not have the same interest in continuing the business that you do. And unless you have the funds immediately available to buy that share of the business back, your business could be at risk. Recognising what needs protecting and why In January 2013 Legal & General conducted some research with the Institute of Directors to assess awareness and take-up of business protection amongst small to medium sized businesses. The research identified a business protection gap of £1.35 trillion (an 18% increase since 2011). Legal & General found that: Almost 3 out of 4 business owners aged under 40 do not have any life insurance cover. For those aged 40 to 49 over 50% didn’t have any cover. 41% of business owners expected their business to fold with 18 months of the death or critical illness of a key person. 50% of businesses had unprotected corporate debt. 6 out of 10 businesses had no protection cover in place to cover the cost of purchasing shares should a business owner die. 1
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Transcript of Ifa brief issue 1 2014
Thomas Carroll Group PLC
Pendragon House, Crescent Road,
Caerphilly CF83 1XX
t
e
w
029 20 86 95 31
thomas-carroll.co.uk
issue:
How Safe is Your Business? Many people think that protecting a business involves insuring the premises, the contents and the assets. That’s true – it does. But when you think about assets, are you thinking about the material assets only, or are you also thinking about the human assets within the business? It’s the people that make a business run smoothly, and without them most businesses would have a hard time functioning. Just think where your business would be if you were diagnosed with a critical illness, or died. If you’re a partner of a small firm and one of your other partners dies, what happens to your business and their share? Who now owns that share of the business and where does that leave you? In many cases, when a director or partner dies, their share of the business passes to the family, who may not have the same interest in continuing the business that you do. And unless you have the funds immediately available to buy that share of the business back, your business could be at risk.
Recognising what needs protecting and why In January 2013 Legal & General conducted some research with the Institute of Directors to assess awareness and take-up of business protection amongst small to medium sized businesses. The research identified a business protection gap of £1.35 trillion (an 18% increase since 2011). Legal & General found that:
Almost 3 out of 4 business owners aged under
40 do not have any life insurance cover. For
those aged 40 to 49 over 50% didn’t have any
cover.
41% of business owners expected their
business to fold with 18 months of the death or
critical illness of a key person.
50% of businesses had unprotected corporate
debt.
6 out of 10 businesses had no protection cover
in place to cover the cost of purchasing shares
should a business owner die.
1
Thomas Carroll Group PLC
Pendragon House, Crescent Road,
Caerphilly CF83 1XX
t
e
w
029 20 86 95 31
thomas-carroll.co.uk
Almost a third of business owners don’t have a
will.
The research concluded that 87% of business owners are positive about their financial future and said they were confident their profits would increase over the next five years. Since Legal & General started their research in 2009 this figure has continued to increase and businesses remain positive about their future. It’s important therefore to ensure that business owners aware of the potential risks that their business could face in the future and that business protection can help to ensure it can continue trading should the worst happen. As well as protecting your business premises, contents and material assets, there are three other main areas you may wish to consider for business protection: 1. Protecting a key person 2. Protecting a director/partner 3. Protecting a business loan.
Why Thomas Carroll?
We have the honour of being named ‘The Chartered
Financial Planners of the Year1 by the Personal
Finance Society – the body which grants Chartered
status to IFA firms and individuals.
Our title demonstrates the excellence, commitment to
professionalism, training and development of our
people which our clients and professional colleagues
have come to expect from us.
We have recently been awarded Corporate Financial
Planning Firm of the Year2 and Retirement Planning
Firm of the Year3 by Bankhall Group, the UK’s largest
distributor of financial services.
Contact us
If you wish to discuss the content of this brief in more
detail please contact Mark Eedy directly on 02920 855
245 or e-mail [email protected]
Tax and legislation are liable to change. This
information is based on our current understanding of
UK law and HM Revenue & Customs practise and
legislation we believe may apply in the future.
No guarantees are given regarding the effectiveness of
any arrangements entered into on the basis of these
comments.
1 Awarded by the PFS in 2010
2 Awarded by Bankhall Group in 2012
3. Awarded by Bankhall Group in 2010 and 2011
