A small company often needs to borrow money from the bank or run an overdraft. In both cases the bank will normally require one or more directors to sign surety for the debt. What most directors don't appreciate is that if they die, the bank will immediately call up the loan. Your company and your personal estate could be left with serious liquidity and solvency problems. If you are a director who has stood surety, you should have a life policy in place to cover the debt and provide cash to pay it off in the event of your death. The policy should be owned and paid for by the company. This is known as a contingent liability policy, which comes with a lot of tricky issues: Tax Many financial advisers are not aware that there was an amendment made to the Income Tax Act (section 11(w)) with effect from March 1 2015, and from this date such company-owned contingent liability policies are no longer tax-deductible. If you are a director and know your company has such a policy, you should c...

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