Do You Like The Idea Of Being In Business With A Stranger?
Partnership Protection Insurance may not be something you want to think about, but the chances of one of your partners dying before they retire, could be higher than you realise. The Medical Insurance Advisory Bureau (MIAB) offer Partnership Protection Insurance (PPI) with your Practice Agreement in mind.
The death of a partner can have far-reaching consequences for the future of a practice - not only would you lose a valuable revenue-earner, but you may end up having to work with your partner’s beneficiaries.
Equally, if a partner became seriously ill, they might well want to leave the practice. In this case, you’d need to have sufficient funds available to buy out their share in the business.
What is Partner Protection? The loss of a partner or director may destabilise the business and can quickly lead to financial difficulties. Partner Protection means if the worst does happen, the remaining partners can stay in control of the business.
How Does Partnership Protection Insurance Work?
In the event of a partner or director dying, falling terminally or critically ill, Partner Protection can provide a sum of money to the remaining partner(s). This means the policy will pay out the sum assured on the insured event occurring, which may be an amount sufficient enough to purchase the deceased or critically ill partner’s interest in the business. In a partnership the existence of a Partnership agreement will be important.
In the event of there being no agreement in place then the Partnership Act dictates what happens. When a partner dies, a partnership ceases and the estate of the deceased partner would usually want to receive the share of the partnership, unless there is a partnership agreement in place indicating how the deceased partner’s share should be paid out.
In either event, there would be a need to find a large cash lump sum at a time when the partnership is suffering through the loss of the deceased partner. Through use of trusts, cross-option agreements the correct structure can be put into place along with life cover and/or critical illness policy(ies) to ensure that you can protect your practice.
If you would like to know more about how The Medical Insurance Advisory Bureau can help you with this, please complete our online enquiry froms and one of our associate advisers will contact you. Alternativey you can call us on 01438 730210
