Business Loan Protection is a life assurance policy or a life assurance and critical illness cover policy.
It can be taken out on the life of a person within your business. Being unable to repay loans can be a serious problem for a business following the death of a key person.
For instance, Director Loans should be paid off on death, Commercial Mortgages and overdrafts are also at risk of being called in should a key person to the business die. The difficult question to answer is “Without business loan protection, where would this money come from?”
Business loan protection is similar to the personal life insurance taken out to cover a mortgage. In the majority of cases, you can protect the full amount with life cover, or life and critical illness cover. You can select a decreasing or fixed value sum assured, but the term of the cover will have to ideally match the term of the loan.
When the claim is made, the proceeds are paid to the policy owner, who can then decide to pay off the loan in full or to continue repayments according to the initial agreement with the lender. They can also assign the policy to the lender, in which case the chosen insurer will pay the claim proceeds directly to the lender.
With various types of debt and liability within a business let Futures Protected make sense of how to structure policies to ensure the cover is correct and suits both requirements and budget.