Business Loan Insurance can ensure the financial obligations of your business are met in the face of a key employee, partner or owner’s death, disability or critical illness. All it takes is one disaster to impact a business’s economic future! Before you know it, the company is in disarray, it is unable to meet its financial obligations, and bankruptcy is looming. Having a business loan insurance policy can help secure your business’s finances and prevent it from having to file for bankruptcy or other serious business interruptions.
Proper planning regarding business loans using insurance can also ensure:
- Normal business activities can continue uninterrupted. Minimize potential cash flow problems – creditors will often demand that loans be repaid immediately.
- Keep business investments and other assets in fact – you do not want to be forced to liquidate key business assets at fire sale prices.
- Preserve the owner’s business and or estate in the event that ‘personal guarantees’ were required to secure business loans.
- Preserve your personal insurance for what it is intended to protect – your family.
Types of Business Loan Insurance Protection
Loan Insurance Protection for businesses typically comes in four different types of coverage, including:
- Life Insurance – Should a primary owner or partner in the business pass away, a Life Insurance policy on the loan can provide the funds necessary to cover the business’s unpaid debts. Plans can be designed to offer the total amount of the loan coverage, and some even offer early death benefits in cases where the individual is still alive but diagnosed with a terminal illness.
- Accidental Death and Dismemberment Insurance – Accidental Death and Dismemberment Insurance provides coverage for those who suffer either a death or a severe injury due to an accident. Quite often this type of coverage is chosen when an owner or partner does a considerable amount of business travel. Depending on the provider, this type of coverage is sometimes bundled in a business’s Life Insurance Policy.
- Disability Insurance – Disability Insurance protects the business’s financial future in cases where the owner suffers mental or physical disability that renders him or her unable to run the business. This policy will help ensure the company’s financial obligations are met up to a specified period of time or until new leadership is assigned.
- Critical Illness Insurance – Should a primary owner or partner suffer a Critical Illness such as Cancer, Heart Attack or Stroke and is no longer capable of contributing to the company’s financial future, a Critical Illness policy on the loan can provide the funds necessary to cover the business’s unpaid debts.
Health Risk will champion the evaluation of your Company or Business need for Loan Insurance Protection based on your unique situation and then recommend the appropriate insurance product or products.
For Loan Insurance Protection we would most often suggest a plan providing the most “cost effective” and “time sensitive” structure such as Term Life Insurance and Lump Sum Disability or Critical illness insurance. Health Risk always recommends that your Accountant play a role in the establishment of appropriate insurance programs in order to determine the proper tax implications for your Company or Business.
Please contact Health Risk should you have any specific questions you may have regarding Loan Insurance Protection or if you would like to receive a quotation.
DISCLAIMER: Please be advised that the information on this web site is intended to present a broad variety of general information as simply and accurately for your knowledge as we possibly can. In no event does this information form part of or apply as a legal document. Therefore, please note that rules, conditions and industry practices discussed may be changed over time.