Whether you run a corporate, small, or medium-sized business, business protection insurance is vital to securing the succession and continuity of your company.
Many entrepreneurs spend the bulk of their time running and developing their business. They work towards securing the future and growth of their business. Very rarely do they consider what would happen to their business if they were to unexpectedly die.
Here is everything you need to know about the importance of securing Business Protection Insurance.
The Unavoidable Truth
As unpleasant as the thought of our own death is, death is a part of the inevitable cycle of life. Ask yourself, would your business survive if you were to pass away? There’s no escaping the fact that whatever type of business you have, your death could have a catastrophic impact on the future of your organization.
Your death, whenever that may be, could have a devastating impact on your business profits, and possibly lead to financial hardship for your own beneficiaries. Although you cannot be replaced, the proceeds of a business protection insurance policy will help to protect your business assets as well as your beneficiaries.
Death and Business in the UAE
If a business owner dies in the UAE, the implications are very complicated. From the legal and financial consequences to the emotional fallout, there are many risks associated with the death of a business owner. This includes financial risks, family risks, personal financial risks, legal risks, and business risks.
Most entrepreneurs and corporates invest everything into their business. Essentially, their business is their legacy – the single most valuable asset the owner possesses. Rather than protect their business in the event of their death, they reinvest all of their generated profits for the development of their business. As all profits are typically reinvested in the business, their organization becomes their sole source of income.
In the UAE, when a business owner dies without business insurance, their income may stop despite expenses and business costs adding up. More importantly, all organizational assets and bank accounts will be frozen immediately upon the death of the CEO or owner.
Essentially, when a business fails, or if the owner dies without proper income protection, their family could be left holding significant accumulating debt without any source of income. This is especially true when the company owner is the main source of income for their family. Business protection insurance is designed to protect your legacy, the future of your business, your loved ones, and your personal assets.
Protect Your Family and Your Business
When you purchase business protection insurance, you are protecting your assets and business from the various risks associated with your death.
– Family Risks – In the UAE, it is the sole responsibility of the family to perform certain rituals to the remains of their loved one. When a person dies in the UAE, their body is released to their family only after clearing all liabilities (personal and professional), in that person’s name. What would happen to your family if you died without business protection insurance?
Ask yourself, would your family be able to settle your personal and professional liabilities without draining their entire estate? How would your family overcome the emotional implications if they were not able to release your body in a timely manner? Business protection insurance ensures all liabilities are paid promptly so a family can lay the body of their deceased loved one to rest.
– Legal Risks – In the UAE, when a deceased expat is Muslim, all of their personal and business assets are distributed per the law of the land (i.e., Shari’ah Law). In the event the expat is not a Muslim and has created a Last Will and Testament, per Shari’ah Law, their assets are distributed according to their will. However, the path forward quickly becomes legally complicated with the absence of a will.
In the UAE, guardianship of the minor children of the deceased is not automatically granted to their mother. Without a last will, the father of the deceased (i.e. the paternal grandfather) is granted automatic guardianship of all minor children. If the government is not able to contact the paternal side of the deceased’s family, the children could end up in government care. Additionally, without a will, both personal and business bank accounts may be frozen (within one hour of death) until all the liabilities are cleared and the court declares the succession of assets. Business protection insurance allows all liabilities to be paid in a timely manner to avoid waiting on court results.
In the absence of a registered will, the estate of the deceased is distributed according to Shari’ah law. This can open a variety of implications for a business owner. Without business protection insurance, their family may be left with limited or no access to their bank accounts/assets for up to 18 months (while the courts decide on how to distribute the assets). Business protection insurance helps to ease the legal risks and stress for the deceased’s beneficiaries.
– Business Risks – When a business owner dies, their family does not gain immediate access to the money invested in their business. In the absence of the owner, how will the business acquire adequate working capital to continue their daily operations? How will suppliers be paid? How will outstanding debt in the market be collected? How will the salaries of the employees be paid?
This slippery slope can lead to many more unforeseen complications. When employees are not paid on time, they may leave the company. When employees leave the company, how will their gratuities be paid as per labour law? Not to mention, when key employees leave a company they take away business, clients, and may partner with industry competitors – all of which impact the value of the business left behind.
The Solution – Business Protection Insurance
By establishing Business Protection Insurance with a reputed offshore insurance company, you’ll be able to ensure your business will continue uninterrupted in the unlikely event of your untimely death. Additionally, business protection insurance protects your family from all the financial hardships, allowing them to focus on what matters, their grief.
Contact a member of our team to learn more about how business protection insurance can protect your business, family, and legacy.