Debt Protection Insurance

 

Because the personal assets of the owners usually secure the current, term and contingent debts of a business, the owners/principals, and their families are vulnerable to negative changes in the business.

If the services of an owner/principal were lost, through death, or disability, the holder of the security or guarantee may decide it is prudent to exercise the right to ‘call-up’ the debt.

If this happens in times of recession, or difficult trading conditions, the result can be financially disastrous on the business and on the families of owners or principals who have signed personal guarantees.

Call-up of the business debt as a result of lack of confidence by a mortgage or debenture holder is not in most cases, predictable. The inability to meet this call can lead to a “fire sale” of personal and business assets.

If the current, term, and contingent debts of the business are fully covered by trauma, death and disability insurance; taken on all owners and principals, for the specific purpose of cancelling the debt, that problem ceases to exist. Life, Trauma and TPD insurance can provide the funds to cancel the debt, protecting the asset base.