Being part of a successful partnership means overcoming constant challenges, when things go well thanks to skills and efforts of you and your fellow partners it can be very rewarding. If something goes wrong which could well be for reasons outside your control your financial security and that of your partners can be at stake.
A death or serious illness of a key person in your business whether they are a partner or a highly valued employee could threaten everything you worked so hard to achieve. So doesn’t it make sense to treat it like any other risk and put plans in place to help protect your partnership. Usually each person in the partnership is guaranteed certain rights, the exact rights vary from business to business but would typically include:

• The right to receive a share of the partnership’s profits
• The right to insist that the partnership is wound up and then to receive a share of the partnership’s value

Now imagine that the rights of one of your partners ends up in the hands of somebody you do not know, and who does not know your business. This could be exactly what happens if one of your partners becomes seriously ill or dies – their share could be passed to somebody else through either sale or inheritance.

To avoid the risk of rights in your business passing to the wrong person you need to establish a legal framework and it gives the remaining partners the right to buy out the share of any partner who becomes seriously ill or dies. This will help to ensure that the business remains in the right hands and that any Dependant receives the financial value of the partnership share. However, while a legal framework can ensure you have the right to buy it cannot ensure you have the money you need to exercise that right. This is where life assurance and critical illness covers come in.