Overview of Business Loan Insurance
In the event of the death or serious illness of one of the key persons, the loan may be required to be re-paid immediately, or the effect on the business may be that there are insufficient funds to make the loan repayments whilst a replacement is recruited and trained.
The consequences could well be that the business goes under or has to be sold off just to repay the loan. By taking out Business Loan protection the remaining owners and/or directors of the business will be able to pay off the loan with the proceeds of the policy, thus ensuring that the business is able to continue.
Why take out Business Loan Insurance?
It may be that the lender will require the loan to be re-paid on the death of a key person and will require insurance to be put in place as a condition of the loan agreement.
Even if this is not the case it is still prudent to put a policy in place as the loan may be guaranteed by one or all of the remaining Directors or shareholders, or the lender may have taken a charge over their property and in the event of the loss of a key person the business could well have cash flow problems to contend with in addition to having to possibly repay the loan.
Types of Business Loan Insurance
It is always advisable to take out insurance to cover any loan but many businesses report that this subject was not mentioned by their lender.
Usually, these will be Life only or Life with Critical Illness cover included.
They may be level term to provide a fixed sum, alternatively, they can decrease in line with a loan repayment schedule.
It is also possible to set up an Increasing Term policy if this is deemed to be required by the Company. Policies will be put in place to suit the specific requirements of each Company.
Our qualified advisers will discuss your requirements and search the market to find the right cover to suit your business needs and your budget. Contact us today to discuss business loan protection and obtain your free, no obligation quotes.