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Why Business Debt Insurance is important.
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Borrowing money is a normal part of business.
In terms of their credit policies, South African banks and other financiers usually require the owner of a business to sign surety on behalf of the business to secure a loan.
This means that you, the business owner, or your estate will be personally responsible for repaying this debt if you should become disabled or die before the loan is fully paid back.
In order to repay the business’ debt, you or the executor of your estate may have to use capital that was intended to take care of your family, leaving them unprotected.
The business takes out life and/or disability cover on the life of the business owner. The payout from the life insurance policy is then used to repay the loan from the bank or financer on the death or disability of the business owner.
This prevents creditors from demanding payment of the loan by the deceased estate or the disabled business owner, which means you, your business and family, will be protected.