Unlike Ltd Companies risks associated with partnership firms are unlimited as all partners are jointly and severally liable for all acts omissions and commission.
What are the Critical risks associated with partnership firms?
What happens when suddenly a key partner goes out of the scene by an act of God?
Following situation may arise.
1) In the absence of key partner/s the growth of the company retards as there is a huge void in operating skills in running a business.
The remaining partner/s is unable to cope up with the new situation hence the growth of the company goes very rapidly into a negative direction.
2) The members of the family of a deceased partner shows disinclination to continue as a new partner in the firms and logically demand their share in the business plus Goodwill with a view to retire from the business.
Under both the scenarios firm needs a large amount of cash in order to meet with the revised situation peacefully
We provide business protection to a running profit making partnership firm to meet with above situations.
How does it work?
All KEY partners are insured for a particular amount of sum based on valuation of the business.
In the unfortunate event of a death of any key partner/s firm gets a large amount of cash which could be utilized to face the critical scenario arising out of changed situation as mentioned earlier ,
Beside the entire premium will be paid by the firm and will treated as business expense u/s 37(1) Of IT act 1962