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Keyman Insurance to cover bank loans
When a business borrows money, usually from its bankers a number of different  types of security may be required by the lender. One of these might well be a Personal Guarantee from the Director(s)/Partner(s) of the firm/company. This is in essence a ‘promise to pay’, made by the Director and or Partner and could be enforced by the Bank should the business be unable to repay a facility that is in place. In some instances the guarantees are supported by a charge over property.
It is vitally important that life insurance (and/or critical illness cover) is taken out by the business to enable any outstanding liabilities to be repaid in the event of the death and/or critical illness of one of the directors/partners to ensure that both the business and the family of the person giving the guarantee are protected.
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