There is something truly magical about starting your own business. Weathering the highs and lows, working harder than anyone else in your business, longer hours, and scraping by until your baby can stand on its own two feet.


Once your business gains traction and you’ve put everything in that you can, you’ve put your name to whatever it takes to get whatever is needed, you become consumed in ensuring that your company grows from strength to strength.


But in your single-mindedness, and with your focus solely on your business, it’s very easy to miss some of the more important aspects of business financial structuring that, if something were to happen to you, could just as easily cripple your family financially.



There are some situations that require a type of policy called a Contingent Liability policy. This is a policy that provides capital that would be used to settle some of the outstanding obligations of the business towards its creditors. Here are some of the examples that would require Contingent Liability cover:



In a lot of cases, business owners or even Directors would sign surety for loans or accounts that the company takes out for assets, or equipment. In the event of the person that has signed the surety were to pass away, then the debt would become realisable, and this would then place the business in a very tough position where it would need to find the capital to settle the debt and this may be more than the company can achieve at any one time.



When one starts a business, it’s often more than just blood, sweat and tears that is put into the company. Huge amounts of money is invested into the start-up or when acquiring a business and this is money that is actually owed to the owner (and in the event of him passing away, his estate). If you’ve invested R 2,000,000 into your business, and you were to pass away, the business owes your estate the R 2,000,000. If it doesn’t have access to the funds, then your family would be left without that money and the Executor would be forced to liquidate the business and that leaves no one winning.


The Contingent Liability cover is only one of the fundamental structures needed when one sets up a business. Strangely enough almost every single business owner I’ve met with to date has needed Contingent Liability cover but has not had it. Sadly, it would be the business owner’s clients and the company’s employees that would likely suffer in the event of the loss of the business owner and no one wants that.


Taking the time to investigate if your business has the full Contingent Liability cover that it needs wouldn’t cost you anything but is vital, so double check as soon as possible.


If you’d like more information, or a chance to speak to a business specialist please feel free to get in touch via the website.

About The Author

Steve Hughes

Steve Hughes is an independent financial advisor specialising in personal and business solutions. He has a passion for empowering people through better understanding and has created a fresh and highly sought-after approach to financial planning. He is the founder of the PLATINUM model of fringe financial services and the PLATINUM EVENTS, and you can catch him on LIFE MATTERS, OneFM 94.0’s weekly business & finance show which he produces and presents. As a private wealth consultant and business owner, his approach to personal and business consulting is industry leading, and it is his desire to reshape the financial service world that drives his passion. Steve can be reached at

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