GUARANTOR/THIRD PARTY PROTECTION

Many small business owners personally guarantee the business loans and finance using their family home as security and sometimes there is a silent funding partner. This cover can prevent the loss of the family home or other assets if a guarantor dies, is disabled or suffers a critical illness.

You put in a lot of effort and personal sacrifice to build and run a business. Delivering goods or services, watching the costs, getting the right connections and the right people in place are keys to success. Your wealth is generated by, and often locked up in, your business. 

Most businesses, in order to start or expand will have organised one or more loans. More often than not, because these loans are of substantial amounts, they require a personal guarantee. A personal guarantee means that the loan is secured against the personal assets, most commonly your home or other properties. These ‘guarantees’ are not extinguished until the loan is repaid in full or revoked by the bank or creditor. In the sudden event of death, the guarantees and loans do not die too. Repayment or renegotiation is a critical financial issue that is inherited by other guarantors or your family.

What is Guarantor Protection Insurance?

The concept of Guarantor Protection is simple. A Guarantor Protection policy ensures that on the death or total and permanent disablement of a guarantor, the debt can be fully repaid. The business owners and guarantors are protected from the ramifications of being forced to liquidate their assets to repay the loan. While this primarily benefits the guarantor and his or her estate in protecting personal assets, it also has benefits for surviving principals. With the debt repaid, the business owners and guarantors are freed from further financial burdens at a time of stress. 

Dirigo Protect can assess guarantor protection requirements as part of a comprehensive review of your business insurance needs.