Business Needs

Running a small to medium sized business is a risky business. The unexpected death or disablement of a business owner can potentially destabilise the ongoing viability of the business.

There are three basic types of business protection needs that typically apply to businesses, these are:

  • Asset protection;Man_looking_at_computer
  • Revenue protection; and
  • Ownership Protection.

Asset and Revenue Protection

When business owners are asked about what their most important business assets are, they invariably think of physical assets. However it is the intellectual capital provided by key people in the business, who employ these assets to generate business profits.

These key people are the most important assets of the business and what effect does their death or disablement have on the long term success of the business?

Without the security provided by a key person then the business may face many issues including:

  • Lenders are not prepared to extend credit and call up loans or personal guarantees
  • Customers and suppliers lose confidence in the future direction and trading capacity of the business
  • Is there a logical successor?
  • Is there a drop in revenue due to loss of a key person?

There are many scenarios that may result in the required sale of assets which generally have been put up as collateral security and are still required to generate income.

It is not commonly recognised that the death of a guarantor in most cases triggers an automatic default in most business loan agreements – entitling the financial institution to call in the loan facility and proceed against a guarantor’s assets should it decide.

Insurance cover can provide funds to allow extinguishment of debt on the death, disablement or critical illness of a person critical to the success of a business as well as provide funds to cover loss of revenue.

Ownership Protection

Succession planning and protecting the ownership of the business is particulary important especially in businesses more than one owner. What if one of the owners of business dies the?

  • Does that share go to the surviving spouse/ heirs?
  • Do the other shareholders want the surviving spouse/ heirs to retain a share in the business?
  • Does the surviving spouse/ heirs want to be involved in the business?
  • What conflicts will emerge between the competing interests of the new beneficiaries and the continuing owners?

Although we do not like to think about it the chance of a death or disablement among owners is surprisingly high. Ownership protection insurance can provide the funding for a Business Succession (Buy/ Sell) Agreement allowing the continuing owner(s) the right to purchase the deceased or disabled party’s interest in the business at an agreed price, guaranteeing the orderly, equitable and certain transfer of the business.

Please find attached below a summary table of the importance of business protection. Please contact us on 1300 822 902 for more information on protecting your business and ensuring its ongoing success.


Asset Protection
for Business Debts Business may have problem repaying debts in event of death, disablement or critical illness of owner. Insurance can provide business with enough cash to repay debts and extinguish personal guarantees.
for Shareholder/
Directors loans
Lenders can recall loans. Business may be liable to repay shareholder loans to deceased estate. Insurance can provide enough cover to repay loan.

Revenue Protection
for Key People Business could suffer a large drop in revenue due to death, disablement or critical illness of a key person. Insurance can provide enough cash to cover loss of revenue and fund cost of replacing key person.
for Business
Disablement or illness of a key income earner may place strain on business which still has to meet ongoing fixed costs. Business expenses insurance provides a monthly benefit to cover fixed costs of the business while a key income earner is unable to work.

Ownership Protection Insurance can provide the funding for a Buy/ Sell agreement. This enables the guaranteed, orderly and equitable transfer of ownership of the deceased or disabled owners interest in the business, at an agreed price.
for Outgoing Owners Beneficiaries If an owner dies or is disabled their interest in business may be left to beneficiaries. Beneficiaries may not get fair value for their share and not want to be involved in the business.
for Continuing Owners For continuing owners they may be left with new shareholders who may not have the same interests of shareholders still working in the business.