Take, for example, Sipho Dlamini and his business partner, Mayra Banks, who own a small gym in Johannesburg. They know that their business and families could be faced with tough times if anything should happen to one of them, because life cover is still on their to-do list. The people counting on them could be left with nothing but start-up debt, running costs and general living expenses usually covered by the business.
A business should take out life cover on principal members and make the business the premium payer, too.
In accordance to Section 63 of the Long Term Insurance Act, the proceeds of the policy will go directly to the owner of the policy (in this case, the business) and not to the estate of the deceased.
The business will have funds to use in the business or to pay off loans or debt.