Business Insurance

Business Insurance Strategies

The risk of being in business applies not only to trading for a profit, but to the death or disability of partners or major shareholders, key members and benefit packages that attract and retain good staff.

Business insurance helps you identify, evaluate and deal with these risks and set up meaningful medical aid and pension benefits to create staff loyalty.

Has your company got a Disaster Plan?
Have you a Strategic Contingency Plan in place?
(This is extremely important for the Sole Proprietor).


The Sole Proprietor.

Your death or disability creates unique problems compared to other business entities. In most cases, you are the business and without you it stops.

How will your family then live?
Unless you have a certain arrangements to provide for them, they will be destitute!
If your Will does not state what you wish to happen to your business, it will be closed.
What then?
You can;

  • Liquidate the business. But what about your family's income and your employees?
    You can bet the value will be way less than expected. What about debts? Bet again, they will further reduce your value.And how will debts really be collected?
  • Bequeath it. Who will take over? With you gone, how will your employees feel? And your debtors and creditors? It's a fact that not many heirs succeed in such business ventures.
  • Sell it to a qualified employee. But where will the money to buy it come from?

The answer to all of the above concerns is... Life Insurance!

The proceeds can be used to provide;

  • Cash to settle debts and offset any losses invariably caused by liquidation.
  • Working capital whilst your heir learns the business, keeping your dependants, debtors and creditors happy.
  • The finance to enable the purchase of the business by a chosen employee.

Some questions for Other Business Entities;

  • Do you have any employees whose death or disability would have a negative financial impact on the business?
  • Have any of the business owners signed personal surety for loans that the business has been given?
  • Have the business owners made an arrangement about how to deal with each other’s interests in the business should one of them die or become disabled?

These risks are common to most businesses and the life insurance solutions that we use to deal with them are:


  • Key person insurance.
  • Buy & Sell insurance for partners.
  • Contingent Liability insurance.

You may use life insurance products that provide lump-sum benefits or products that are intended to replace lost income.

Another important aspect of treating risk in a business insurance context, is the tax and estate duty treatment of the policies that are used to address the particular needs.

Structured correctly, business insurance policies can qualify for substantial tax concessions.

Key person Insurance - is life insurance that employers take out on the lives of key employees who contribute substantially to the success of the business. Should a key person die or become disabled, the business will receive the policy proceeds and use them to offset the loss that the untimely death or permanent disability has caused.

It is an effective method of passing the financial risk that relates to the loss of key employees to the insurer. It therefore limits business risk.

Buy and Sell Insurance - is life and disability insurance that business co-owners take out on each other's lives to enable them to buy a deceased or disabled co-owner's share in the business. An agreement that the various business co-owners enter into among themselves governs the policies.

It provides a business with a plan that allows it to continue if one or more of the co-owners were to die or be disabled.

A binding buy-and-sell arrangement funded by life insurance is the only sound way of providing in advance for protection against an event which may disrupt the whole business, guaranteeing ready cash at the right time.


In this way the survivors need not incur any extra commitments.

Contingent Liability Insurance - is life and disability insurance that a business takes out on the life of an individual who stands surety for the debts of the business.

Should the surety die or become disabled, the insurance policy will provide the funds that are necessary to repay the outstanding debt. This releases the surety's personal estate from this liability.

It serves two important functions:

  • It protects the company from any adverse effect on its credit worthiness as a result of the death or disability of the surety.
  • It protects the business owner's personal estate from any claims that may arise for any surety ship agreements that the business owner signed on behalf of the business.

Overhead Expense Benefit

The Overhead Expenses Benefit provides monthly funding for business expenses while you are disabled. The benefit is payable for a maximum of 24 months or until the benefit expiry age of 60, 65 or 70 is reached – whichever happens first.


have Questions?
Ask a specialist

011 083 5005

Feel free to
Contact Us