This is a specific kind of life insurance that can provide compensation to a business partnership. If one of the partners dies a lump sum will be released, allowing the deceased person's share of the partnership to be bought from their next-of-kin. The death of a partner can be an extremely distressing and traumatic experience for those involved. As well as that, this unfortunate event might jeopardize the financial security and stability of the partnership as many business partnerships are based on years of collaboration, mutual support and friendship.
Partnership Insurance can be taken out by members of a business partnership of any kind. In the event of the death of one of the partners, the policy provides a lump sum which is usedto purchase the deceased partner’s share of the business. Before taking out a Partnership Insurance Policy, you are advised to seek the assistance of legal and taxation advisors. The premium that is paid on a regular basis during the term of the policy will be dependent on a number of different factors, such as the value of partnership etc. If the unexpected happens and a partner dies, the policy will provide a lump sum to compensate for this event.
The remaining partners could be legally obliged to pay an immediate capital sum to the deceased's estate. This money may need to cover a range of different costs such as undrawn profits, any share of partnership fixed assets, and the balance of the deceased's capital. The partnership may be under financial pressure to provide the deceased partner's next of kin what is owed to them.