BUSINESS ASSURANCE

Key person cover is a type of life insurance taken out by an employer on a crucial individual (like an owner, director or employee) whose expertise and contributions are vital to the business’s operations.

The life policy is owned and paid for by the employer and, when the key person passes away, is disabled or suffers a critical illness, the policy proceeds are payable to the employer.

A business is likely to incur liabilities and often require credit facilities from the banking institution. It is standard practice for creditors to request a surety or personal guarantor for the business’s financial obligations to them.

A suretyship is an undertaking by a surety (normally the business owners) to fulfil the financial obligations of the debtor to the creditor. The surety binds them as well as their deceased estate as surety for the business’s debts.

Contingent liability is a policy that can be taken out by the business on the life of the surety to provide the business with funding on the surety’s death, disability or critical illness to settle the loan. A contingent liability agreement can be put in place to ensure that the business uses the proceeds toward the settlement of the debt.