Loan protection
When business protection really pays off

The loss of a key person can put immense pressure on remaining owners and senior directors. Apart from increased work loads and potential loss of profits, there may well be the added burden of financial commitments such as outstanding business loans.

Lenders usually require this cover and directors may have given personal guarantees – often using their residential home as security – so there is the added need to ensure that dependants of key people are protected.

Directors may also have made loans to the company themselves, either by cash injection or by leaving salary, bonus or dividends in the business.

Known as director loan accounts, these become repayable to the estate of a deceased person and need to be included in the sum assured. In a partnership there may be similar loan accounts owed to individual partners and these need to be covered in the same way.

Even in the event of a critical illness, the repayment of such a loan would give the key person involved much needed personal financial security.