Business Loan Protection

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.

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.

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.