If the death, disability, or major health trauma of a key person results in a reduction of business revenue, profit or value, the business owners may be faced with one or more of these alternatives.


 🛑 The problems here are:

 ❓ Will the business be able to service an additional loan at this time?

❓ Or will a lender be willing to make further loans at this time?

❓ Also, does the business already have existing loans?

❓  In addition, do the business or its owners have additional security to give to the lenders.

🛑 Additionally there are still problems if:

📌The key person is a business owner and loan guarantor.

❓ What if the key person has given a personal guarantee to support a business loan?

💡 If a financier perceives that the loss of a key person reduces the viability of the business, they are likely to demand partial or full repayment of the debt.

💡 In addition, most personal guarantees to support a business debt are joint and several – a financier will attack all or any of the guarantors for repayment, either full or partial.

💡  Also, personal guarantees survive a death and are a prior charge on the estate of the guarantor.

💡 This means that the estate of a deceased guarantor cannot be probated until the terms of the guarantee have been dealt with to the satisfaction of the financier and the guarantee extinguished. This can take months, or in an extreme case, a year or more.

📌 The business incurs contract performance penalties.

❓  Can the contract still be completed within the terms? .

❓  Is there a reserve fund to cope with possible penalties?

❓ How about if the business loses value in the interim.

❓ How much of the income or profit is the key person responsible for in the areas of

👧 Management

🤴🏻 Sales/Relationships

🧔🏻 Specialist tasks

💡  Specialist Tasks are those that require highly specialised skills in their performance such as in the areas of manufacturing, design, advisory and service, from which revenue is derived and which skills are difficult to replace

❓ How can the loss to the business be quantified?  🕵🏻‍♂️ This requires a specialist Key Person Protection adviser 🕵🏻‍♂️  LEARN MORE


Learn more: Complimentary E-book, “Learn How Key Person Insurance Can Save Your Business.”

Complimentary e-book

Call me to see if your business qualifies for a Financial MRI Scan:- 💡 A ten point guide to financial security and peace of mind in 60 minutes – at my cost.

 09 44 66 057.  – 021 960 537 – Info@Wealthbuilders.co.nz