Protect your business against the unexpected

Businesses take out loans for many different reasons. Whether it’s to kick start the company or expand your operation, loans can provide temporary support when you need it. The ability to repay a loan normally rests with a few key people such as an owner or director. If something were to happen to those people, the business needs a policy in place to make sure there is enough money to repay any outstanding loans. That’s where Business Loan Protection insurance kicks in.

What is Business Loan Protection?

Business loan protection is put in place so that it can protect the business when a key employee, partner or owner passes away or becomes critically ill. Whether they are a guarantor of the loan or a key person that will be involved in the loan repayment, it ensures that the business can continue to run as normal in the event of their death.

What can it be used for?

If a key person within a business dies or becomes critically ill, it can have a significant impact on the company. In such circumstances, the remaining business owners may have difficulties meeting existing loan repayments. Business Loan Protection ensures that a financial amount is paid to the business should this happen. It then provides the business with an opportunity to find a solution with a lender. Whether this is to repay part of the loan or agree on another repayment plan, it can help the business to stay running as normal.

How does Business Loan Protection work?

When a business has outstanding loans such as a mortgage or director’s loan, Business Loan Protection can be put in place. Business Loan Protection is a life insurance policy or life insurance with critical illness cover that is taken out on the life of key individuals. It is set up by the business and paid for by the business. The amount of cover should reflect the amount taken out in loans and repayment amounts. Should that individual die, the business is then paid a lump sum of money equal to the amount of cover taken out. This money can then be used to help pay any outstanding debts or loans. Business Loan Protection can be used to cover substantial overdrafts, loans, commercial mortgages or director loan accounts that need to be repaid on death. They can also cover the individuals that have guaranteed the loan.

How much cover do I need?

The level of cover that you need should reflect the amount that you’ve borrowed. This is to ensure that it can all be repaid should something happen. It can also be taken out on either a level basis where payments remain the same over time or on a decreasing basis to reflect the repayments that you might make over the course of the insurance term.

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Frequently asked questions - Business Loan Protection

Please drop us a message if you have any queries. Here are the most commonly asked questions about Business Loan Protection Insurance.

Do I need Business Loan Protection?

When taking out a loan some lenders require a life insurance policy to be taken out in case the loan cannot be repaid. Even if it’s not required, it can be worth taking out a protection policy, just in case. Whilst you may think that there is enough in savings or investments, if something happens unexpectedly the loan may need to be covered quicker than anticipated. With Business Loan Protection, you get a financial payment that helps to cover any outstanding loans and debts. It can help give peace of mind to you that any loan can be repaid in the event of a death.

Why do I need to insure company loans?

When you take out a loan for your business, there is normally a personal guarantee in place. This is usually taken out by a director or business owner. Often, the loan needs to be repaid in the event of the death of a guarantor. This may be a little earlier than anticipated. When a company cannot afford to pay back any loans, company assets might fall into the control of any bankers. With Business Loan Protection Insurance, your business is provided with a financial payment in order to facilitate the repayment of any loans. It also enables more time to negotiate any repayment solutions whilst allowing the business to continue to run.

What does Business Loan Protection cover?

Business Loan Protection is taken out to cover any overdrafts, venture capital loans, commercial loans, commercial mortgages or personal guarantees that will need to be repaid in the event of a death. It ensures the business can afford to repay any debts and continue to run as normal.

Who pays the premiums?

Business Loan Protection is paid for by the business. The money paid out in the event of a death goes into the business to cover any outstanding loans and debts.

How much does Business Loan Insurance cost?

The amount paid reflects the amount of cover taken out. The individual’s overall health and lifestyle are also taken into consideration when calculating the premiums on a life insurance policy. Each policy is based on individual circumstances and the specific requirements of your business. Our advisors help you to get the right level of cover to suit you that fits your budget. We provide free advice and quotes on your Business Loan Insurance so you can see if it's right for you.

Is Business Loan Protection the same as Key Man Insurance?

Business loan protection is a form of life insurance that is designed to cover any outstanding loans should an owner or director pass away. Whilst it is a similar policy to key man insurance, it only covers the amount of the loan and repayment. Therefore, it’s a stricter policy than Key Man Insurance but ensures that debts and loans can be repaid.

What are the advantages of Business Loan Protection?

With Business Loan Protection comes peace of mind. It’s sensible to prepare for any circumstances that might occur in the future. Business Loan Protection Insurance helps with cash flow should a key person die or suffer from a critical illness. It enables the business to stay afloat and running as normal. It can also help to negotiate any changes to the repayment plan based on the loss of a guarantor. Business Loan Insurance provides an added layer of protection for the business.

How do I know if I need it?

If you’re not sure if you need Business Loan Protection, we can help advise you at Business Cover Expert. If you've taken out a loan or are looking to take one out, it might be worth getting loan protection. Equally, if there are individuals responsible for repayments or that play a key role in the success of your business, Business Loan Protection may be required. If such a person were to no longer be around, how will repayments be met? We can help you decide if it's right for you. Get a free quote on your Business Loan Protection today.