Firstly, what sort of cover should a mortgage adviser have in place? In addition to standard life cover and critical illness to protect any dependents, and to cover personal liabilities, a broker may want to look at various covers to support the business should, for example, the principal become ill, or in the event of death consider ownership issues.
Secondly, if the brokerage is owned by more than one person then key person insurance or partnership protection may be appropriate to enable a smooth transition of the business should the worst happen. Partnership protection in particular can allow shares to be purchased from the spouse of the partner without developing any further issues that may have a detrimental effect on the how the business is ran.
Key person insurance could help to fund the recruitment of temporary staff to cover the immediate workload and also pay for headhunting a permanent replacement. The insurance may help to fund the cost of the salary, while income from the former broker’s procuration fees and life and general insurance commissions come in. All brokers will be fully aware of the time lag between applications, completions and payment.
Depending on the structure of the firm a relevant life plan may also be considered to aid tax efficiency. Group life arrangements can provide substantial free cover levels to even the smallest of firms. Effecting a ‘corporate will’ should not only be considered for large corporates and public limited companies, it is just as relevant to small businesses too.
Income protection should be considered to cover a salary due to sickness over prolonged periods of time. This can be considered on a long or short-term basis using accident, sickness and unemployment cover, which despite its negative press can still have a role to play in covering certain eventualities for a broker.
Finally, while firms will normally have general insurance (GI) cover for office premises, given the responsibilities the financial services sector faces to operate ‘business as usual’ in mitigating circumstances, it may be appropriate to ensure that any GI policy covers business interruption, which can help to fund alternative premises if need be.
Most brokers, I am sure, have most of the above covered but it rarely harms anyone to be reminded of the importance of keeping your own house in order, especially when you consider a worst-case scenario for both the broker’s family and their business as a whole.