Identifying Insurance & Takaful Needs of Business Owners

In identifying insurance and takaful needs for business owners we need to be aware that in Malaysia, there are now four basic business organizations. They are sole-proprietorships, general partnerships, limited liability partnerships (introduced in 2012) and of course companies.

The death of owners of each of these businesses will give rise to several types of specific challenges to the families, as well as their fellow owners in the case of partnerships and companies.

Insurance and takaful solutions, carefully planned and arranged, can definitely minimise these problems and difficulties which will affect all the concerned parties.

There are 4 main objectives in these types of arrangements and they are as follows:

1. To provide for the continuity of the businesses;
2. To minimise the loss of a “Key-Person” in the business organisation (this is most commonly seen in limited companies);
3. To avoid partners of general partnerships and directors of limited companies becoming liable for the debts of their businesses upon the death of a specific individuals; and
4. To provide incentives to directors or selected individual in providing “benefits-in kind”.

To promote these insurance and takaful solutions to business owners so that suitable funds are made available, intermediaries must know the:

1. Appropriate approach and presentation skills, as well as the relevant knowledge of business organizations and their structures;
2. Legal and estate planning principles involved upon the death of business owners;
3. Tax implications involved, both of the premiums or contributions, as well as the death claims or benefits payable in insurance and takaful contracts;
4. Specific agreements (prepared by lawyers) among the relevant parties to be arranged when necessary.

Detailed knowledge and study of the above would require two to four-day interactive workshop sessions. It is pleasing to know that several insurance companies, takaful operators, educational institutions and organisations in the industry are placing greater emphasis on such types of trainings and making it available to intermediaries.