Answer Book question
Usually yes. Beyond the family's needs, business owners carry personal guarantees on business loans, and the business often cannot survive the owner's death long enough to be sold. Term cover sized to clear business debt protects the family from inheriting a loan without a business. Key-person cover protects the business itself.
Usually yes. Beyond the family's needs, business owners carry personal guarantees on business loans, and the business often cannot survive the owner's death long enough to be sold. Term cover sized to clear business debt protects the family from inheriting a loan without a business. Key-person cover protects the business itself.
A proprietor with ₹40 lakh of bank loans on personal guarantee dies. The business stops; the bank pursues the family and the house. A ₹50 lakh additional term policy would have cleared it.
Personal guarantees survive death. Life cover is the cheapest way to neutralise them.
Total business debt on personal guarantee Family needs separately Whether the business could continue or be sold Key-person cover for partnerships
Counting only family needs.
Most Kerala small-business loans carry personal guarantees; most owners have no matching cover.
Family need ₹1 crore + business debt ₹40 lakh = ₹1.4 crore term cover.
If the business debt is fully secured on business assets worth more than the debt, less is needed.
Total the guarantees Add to family need Buy term cover
How much life insurance do I need? What happens to a business when the proprietor dies?
Start or grow a business · Family support
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