Business Assurance offers vital protection for businesses with more than one owner or partner. It protects against a number of potential future events that could adversely affect the continued operation of the business, its long-term survival and the position of its owners. Such future events may include the intended sale or transfer of ownership share to another party. The transfer of ownership can occur as a result of death, disability, critical illness, insolvency, separation from service, termination of employment, or divorce.
Contingent Liability and Loan Cover
Companies incur liabilities in their operations and may often require loans/credit. It is standard practice for the creditors to request a suretyship or personal guarantee to repay the debt.
Contingent liability cover provides a lump sum on the death or disability of the insured to ensure the repayment of a business loan or part thereof, if the full loan is not covered.
Loan or contingent liability cover provides assurance that businesses can settle the outstanding debt on a life changing event and ensures that the estate of the life assured is protected against a claim for the debt.
- Allows for the repayment of loans or credit provided to a business subject to personal suretyship by its owners, should one of the owners die or become disabled
- It protects the estate of the deceased owner or partner against claims
Key Person Cover
Key Person insurance is life insurance purchased on the life of a key person in a business. A key person is someone who is fundamental to the running of the business, who through their knowledge, skill or expertise, contributes to the profitability of the business.
Key person cover is purchased to protect a business from financial loss due to death, disability or illness of an individual who is considered key to the success of its business operation.
Losing a key person can be disastrous for the long-term survival of a business. Although clients can’t predict the future, Key Person Cover can protect against these business risks.
- Compensate for the loss of such key person or allows for the replacement of that person
- Ensures the business continues uninterrupted due to the loss of a Key Person
The Buy-and-Sell Agreement usually provides for the purchase and sale of ownership interests in the business at a price determined in accordance with the agreement, upon the occurrence of certain (usually future) events. The events often include death, disability, insolvency, and an attempted transfer to an outsider. It may also include divorce, and/or separation from service or termination of employment.
Life Assurance is purchased to provide funds to the surviving business owner to buy out the deceased/disabled partner’s share of the business. A Buy-and-Sell Agreement facilitates the arrangement.
- Provides liquidity to the remaining shareholders to purchase the shares from the deceased estate
- Ensures that no unwanted parties become co-shareholders of the company
- Provides liquidity for the remaining spouse, ensuring they receive the full value of the deceased shares