Business Assurance
BUY AND SELL AGREEMENTS
This is an arrangement whereby persons who operate together in a business purchase each other’s interest in the event of their death or permanent disability. This ensures that the surviving parties will retain control of the business instead of admitting the deceased heirs. In turn the survivor is able to provide the deceased heirs with capital to the value of the deceased’s share in the business.
KEYMAN POLICIES
Almost every business has exceptional employees members which it depends on heavily for its success. The premature death of such a key individual can result in severe financial loss to a business and their skills and experience can be very difficult to replace. To compensate the business for such a loss it may be vital to ensure the key individuals life. The plan guarantees that cash will be available to avoid the shock to the business, protect existing credit facilities, and provide necessary funds for the recruitment and training of a replacement.
CONTINGENT LIABILITY POLICIES
SECURE AN OVERDRAFT:
- A policy is often effected by a company on the life of the director to cover large loans. The untimely death of a director or shareholder could seriously impair the companies credit facilities, and to secure the company loan capital it may become necessary for a policy to be effected on the life of a key director or shareholder.
TO COVER A PERSONAL GUARANTEE:
- Often a director wishes to secure a personal guarantee, which they have pledged to, say, a bank. Should the director die while the guarantee is in force, rather than have their personal assets such as shares (which the director has ceded as collateral) taken over by the bank to repay the debt, the director elects to cover their business liability by arranging for their company to take out life insurance policy on their life. The effect would thus be to separate and preserve the director’s personal estate from their business liabilities.
