Risk Management for Business Owners

Risk Management for Business Owners

Business Owners are usually rather good at protecting their assets like vehicles, buildings and equipment but did you know that it is the people in your business knowledge, skills and commitment which contribute most to your success. Small to Medium sized businesses rely heavily on a few key staff and losing one for a long period of time can be catastrophic. It pays to be properly protected so your business can survive should something happen to one of your key staff.

Key Person cover provides a regular payment, or a lump sum should a key person no longer be able to work, due to illness, injury or death. The money can be used for whatever you want but in most cases it is used to cover expenses, pay off debts, distribute money to investors, pay severance to the employees or close the business down efficiently.

The team at Hammock can help you identify the people in your business who need protecting and advise how much they should be protected for. The first person to be protected in the business is usually the owner themselves.

Tip- Business owners can sometimes find it hard to get covered properly because they do not earn enough money on paper. Key person cover uses Gross profit rather than net profit when basing the calculations for Income Protection or Key Person which means it’s often easier for business owners to get adequate coverage under Key Person rather than income protection.

Buy/Sell cover is important for people who are in business with other people. When the business gets to the point where it is worth something and has a registered valuation the shareholders of that business need to get advice around putting a shareholder or buy/sell agreement in place. Usually a buy/sell agreement is backed by insurance policies which are triggered when one of the shareholders dies or gets totally and permanently disabled. This is a vital part of any business as people who have not taken the correct advice could find themselves in business with the life partner of their business partner if they were to pass on early. Buy Sell cover can guarantee the continuity of your business and protects the financial interests of each co-owner and their families.

Hammock advisers work with your accountant and lawyer, we will develop and implement a plan to ensure that you and your other shareholders can convert their holdings into cash in the best and simplest way possible. The buy/sell cover makes sufficient funds available to compensate the family of the insured person for the transfer of their share in the business to the surviving owner.

The most sought-after company benefit now is health insurance. Group Health cover enables the business owner to provide cover to several employees under one contract. For employers, workplace cover is a proven way to attract and retain valuable employees. Employees with workplace health cover return to work faster than those without which means less disruption to the day-to-day operations of the company and your bottom line.

Covering your staff can cost as little as 1% of the company's payroll and can provide your team and their families with top of the line health cover and most importantly cover for their pre-existing conditions. This means that team members who have battled with illness in the past can get full cover with no need for medical underwriting. A genuinely great gesture from a business owner and relatively cheap too.

Tip- implement a voluntary group scheme with an insurance company, they will offer your staff a discount if you offer a package and it costs you absolutely nothing to put in place + you can say that you offer discounted health insurance as a benefit.  

Getting your ACC cover right is really important, all business owners know the feeling of receiving that niggly ACC bill every year, good news is that you have options with ACC and our advisers are experts in getting the balance right between paying for ACC and being protected for accidents (if they pay out) and also putting money into insurance cover like income protection which pays for accidents as well but also illness and mental health, we love helping business  get it right so they are protected well and not paying too much.

We are always keen to have a conversation with any business owners who are looking at options in this space to implement new benefits or to review existing policies.

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