Partnership Protection

The value of protecting a partnership

If a partner dies, their share of the business may pass to someone with little interest in the partnership or objectives that differ from the surviving partners. A partner who becomes seriously ill may also want to retain the option of returning or receive fair compensation for leaving.

A pre-arranged protection scheme can provide funds for the surviving partners to buy the interest in the business or compensate the deceased partner’s family.

What an arrangement may include

• Life or critical illness cover to fund the purchase of a partner’s interest
• An appropriate agreement setting out how ownership will transfer
• Trust arrangements where required
• Provisions for retirement or long-term incapacity

The aim is to support continuity, avoid an unwanted transfer of control, reduce the need to sell business assets and maintain confidence among employees and customers.

The plan has no cash-in value and cover will lapse if premiums are not maintained. Critical-illness definitions, terms and exclusions vary by policy. This information is not personal advice.