Andrew has recovered and since returned to work, but it has left the pair of them shaken and concerned. Andrew’s work was contracted out, resulting in significant costs to the company. A Senior member of Andrews team left during this period as a result of the uncertainty.
Andrew continued to be paid by the company, adding further stresses to cash flow. Scott was worried that should something similar happen to him, the business would fail. Reserves are depleted and although they still have access to lending, this will need to be secured against their family homes.
Without his business, his life-style would change drastically, his Directors Loan would be lost and he would need to lay off his remaining employees.
Scott arranged a Key Person insurance for him and Andrew. This will provide funds into the business should either of them die or become ill. These funds can be used in any way they wish in order to keep the business afloat
Their income, as well as that off their direct employees is now insured. If Scott or Andrew are off, they have 80% of their income insured, plus an additional amount to keep up pension contributions. Their employees cover is similar, but instead of paying until retirement, their policies provides them with up to 2 years income per claim. This helped Scott keep the premium down whilst improving their employment contracts.
Andrew and Scott also reviewed the Shareholder Agreement. Upon the death of one of them, a Shareholder Protection policy will provide the funds necessary to purchase the shares from the others family.
Scott was also surprised to find that he could set up his own personal mortgage insurance through the business tax efficiently.