Personal Liability Plan
It’s exciting when a business invests in its growth – it shows that there is strategic direction and plenty of benefits for the business if it succeeds. Often, credit agreements or financing for growth means that business owners, partners or directors stand for surety against the financing or loan. They become personally liable for a business investment. If the surety dies or becomes disabled, the creditors have the right to claim their debts back from the surety’s personal estate.
This approach is problematic because settling business debts could deprive the surety’s dependants from their inheritance and assets that inherently belong to them. Personal Liability Insurance is a life insurance policy that is taken out against the business owner or partner who has stood surety, so that should he die, the creditors can settle the business debt with the insurance pay out. This also protects other business partners and directors who have stood surety on the same financing agreement, and ensures that they also cannot be negatively affected by the creditor’s insistence on settling the debt.
Personal Liability Insurance also shows the creditor or financing house that your business is serious about settling debts, and increases your credit record standing. By protecting their investment, your company shows its responsibility as a borrower, so you will likely also easily obtain financing again in future. By providing Personal Liability Plans of all of your business sureties, you remove a huge personal burden from them and also protect their family assets and estate, should they pass away.
Contact us for more information on how to set up Personal Liability Plans for your sureties and help to protect your business partners while growing your business.