If One Owner Dies, Could Business Debt Put Everyone at Risk?

Who Is Exposed?

The Business

The Surviving Owners

The Deceased Owner’s Estate

If the lender requires outstanding facilities to be repaid, the business may need to use cash reserves, sell assets or restructure debt, which can threaten its ability to continue trading.

Where owners have signed surety, surviving owners may be personally liable for the outstanding debt and may need to use personal assets to settle business obligations.

The deceased owner’s estate may remain exposed to business debt, potentially reducing the value of the estate and the assets ultimately available to surviving dependants.

Cash flow and assets may come under pressure

The family’s inheritance may be affected

Personal assets may be exposed

How Contingent Liability Protection Works

Identify the Exposure

Determine the Funding Need

Structure Appropriate Protection

Review the business’s loans, overdrafts, asset finance and other credit facilities, together with any personal surety signed by the owners, to understand the potential financial exposure.

Assess the outstanding business debt and determine the level of funding that may be required to reduce the financial exposure of the business and its owners.

Appropriate life cover can be structured to provide funding to help settle business debt following the death of an owner, reducing financial pressure on the business, the surviving owners and the deceased owner’s estate.

Understand the debt and surety risk

Establish the amount that may need to be settled

Provide liquidity when it is needed

Review your business debt, personal sureties and existing protection to understand where the business, surviving owners and an owner’s estate may be financially exposed.