From Paul Willans Financial planning manager Bells Potter Solicitors Farnham, Surrey At the ...
From Paul Willans
Financial planning manager
Bells Potter Solicitors
Farnham, Surrey
At the risk of appearing pedantic, I must draw attention to a fundamentally flawed answer to one of the posed questions in 'IFA Clinic' (COVER June 2001).
Under the title 'Arranging cover for business partners', your correspondent's question related to the provision of life assurance and critical illness cover to a firm of solicitors and the pitfalls of providing cover for the insured's family. In her answer, Ms Cox focused on the possibility that the family may choose not to sell their equity in the firm and that they may insist on active participation in the business.
Unfortunately, active participation in a firm of solicitors is not possible in these circumstances unless the individual members of the family are themselves admitted and practising solicitors. The partnership agreement would be the appropriate mechanism for ensuring that any sum assured was directed to the family.
Furthermore, Ms Cox should have warned of the dangers of including critical illness cover within the terms of a 'cross option agreement', where diagnosis and subsequent pay-out of a minor condition could result in enforceable ejection of a partner against their wishes.
