Business Financial Solutions

The overhead protector protects a business against turbulent times directly after an owner dies.

It creates funding to secure at least the overheads of the business for six to 12 months. This is done by insuring the lives of the owners. In the event of the death of an owner or a co-owner, the proceeds of the policies will be paid to the business.

Business overhead protection is intended to offset your business expenses if you are unable to work due to illness, injury or disability by paying you a monthly amount so you can keep paying your business expenses. This payout could be used to pay day-to-day expenses, such as rent and utilities.

When a co-owner dies, the business normally faces a turbulent time. Remaining owners, employees and clients need to come to grips with the fact that one of the main drivers of the business is no longer there. Normally, in spite of their best efforts, the business feels the impact during the critical 6 to 12 months after the death of a co-owner.

Business operations may be temporarily impeded to such an extent that the business will not be able to pay its overheads.

If the business closes down due to the lack of succession planning the business can be seriously exposed with regard to overheads. The liability in the business may in some cases flow straight into the affected owner’s estate.

Examples of potential overheads that may be claimed even after the business closes down after the owner’s death are:

• The employees of the business may institute a claim for severance pay; and
• The landlord may wish to recover the rental for the full rental agreement period.