Insurance for businesspeople

Insurance is the promise to pay on an event when it is most needed.

Business owners are defined as people who take calculated risks to make a profit for themselves and to benefit others.

From those two definitions, it seems like a match made in heaven. Like apples and pork, lamb and rosemary or wine and cheese, they just seem to go together.

However, some may ask, “Doesn’t the fact that I have a business show that I have created my own insurance?” Others may even say, “I have enough money to self-insure” or “I’ll deal with matters as they arise.”

Let’s delve into why business owners need insurance.

In business, there is a lot of risk and there is nothing that mitigates risk like insurance does.

The acronym SPECCCOP (service, profitable, ethics, competition, cash flow, credit, operate, personnel), shows how important certain aspects of a business can be and, if absent, can bring about the demise of a business.

Have you given thought to:

1. If you are no longer in your business, will the
service stay at the same standard that you established?

2. Will it continue to be as
profitable if you are no longer around?

3. Will the
ethics of the business be maintained by the person taking over?

4. Will your
competition catch up or even take over without your leadership?

5. Will the
cash flow be managed adequately?

6. Will your bankers still extend
credit if they are unsure of the future of the business?

7. Will the business continue to
operate efficiently?

8. Will
personnel or staff stick around when you are gone?

Let us review some insurance options that should be considered.

The "keyman concept" can help solve the issues and concerns that may keep a business owner up at night.

Keyman insurance is a life insurance policy that a company buys to insure the life of an owner, a top executive, or another individual considered critical to the business. The company pays the premiums and is the beneficiary of the policy.

What about businesses that have shareholders? In the event that one party dies, do you feel confident going into business with that person’s spouse, children or siblings? This can be a serious cause for concern, as the person to whom their share of the business passes will be your new business partner.

A funded buy/sell agreement, also known as a buyout agreement, can give you a level of comfort. This is a contract funded by a life insurance policy that can help minimise the turmoil caused by the sudden departure, disability or death of a business owner or partner.

What about if staff die or get sick? Will you have liquid cash to compensate the grieving relatives? If a staff member gets critically ill and needs major surgery with significant cost, where will the cash come from?

These eventualities can be covered with group life and group health insurance.

What about staff being injured whilst they are engaged in their duties at work or on a job site, or if a member of the public slips and falls or is injured on your premises? Would cash be readily available to compensate the affected people?

Workmen's compensation and public liability are of assistance in such circumstances.

Insurance for businesspeople is a definite necessity. This article only scratches the surface of all there is to explore, regardless of the type or size of your business.

The TT Chamber of Industry and Commerce thanks Ricard Skerritt, unit manager, Guardian Life of the Caribbean Ltd (a member of the Chamber) for contributing this article.