The construction industry is a cornerstone of economic growth, but it is also fraught with risks. From project delays to workforce challenges, businesses in this sector face unique vulnerabilities.
Among these, the sudden loss of a key individual or a disruption in ownership can have devastating consequences.
This is where Keyperson Insurance and Buy-Sell Insurance come into play, offering financial stability and continuity during uncertain times.
The following article is contributed by guest writer, Mark Spicer from KPS Wealth (AFS Licence No: 292 830)
Disclaimer: Xact Accounting is not licensed to provide financial products, including insurance advice. The views expressed in this article are solely those of KPS Wealth and are provided for general information purposes only. Readers should seek advice from a licensed professional tailored to their specific circumstances before making any financial decisions.
In the construction industry, key personnel—such as project managers, engineers, or business owners—are often irreplaceable. Their expertise, relationships, and decision-making capabilities drive the success of projects and the overall business. Keyperson Insurance provides a financial safety net in the event of their untimely death, disability, or critical illness. A point to note is that the Keyperson does not need to be the business owner!
How It Works: The business takes out a policy on the key individual, and in the event of a claim, receives a lump sum payout. This payout can be used to:
.For construction companies, this insurance is particularly critical. A sudden loss of a key person can lead to project delays, loss of client trust, and financial instability. By securing Keyperson Insurance, businesses can mitigate these risks and ensure continuity.
Construction businesses often operate as partnerships or family-owned enterprises. A Buy-Sell Agreement, funded by insurance, ensures a seamless transition of ownership if one of the owners passes away or becomes incapacitated.
How It Works: A Buy-Sell Agreement is a legally binding contract that outlines how ownership shares will be transferred in specific scenarios. Buy-Sell Insurance provides the funding for this agreement. In the event of a claim, the insurance payout enables the surviving owners to buy out the departing owner’s share without financial strain.
Benefits for the Construction Industry:
The construction industry is highly competitive and project-driven. Any disruption—whether due to the loss of a key individual or ownership disputes—can have a ripple effect, impacting multiple stakeholders. Keyperson Insurance and Buy-Sell Insurance provide a proactive approach to risk management, ensuring that businesses can weather unforeseen challenges.
Key Considerations:
In an industry where time is money and relationships are paramount, the importance of Keyperson Insurance and Buy-Sell Insurance cannot be overstated. These policies not only protect the financial health of construction businesses but also provide peace of mind to owners, employees, and clients alike. By investing in these insurances, construction companies can build a foundation of resilience and long-term success.
If you’d like to set up a time to discuss your personal circumstances and discuss any of the content in this article, you can reach out to:
Mark Spicer, KPS Wealth
[email protected]
ph: 07 3715 8415
