Business Loan Protection Insurance
Business loan protection cover
Business loans are a common source of finance for many companies. In the sad event of a key person or owner leaving the business through critical illness or death, business loan providers could make this unfortunate situation worse, by requesting any business loans to be repaid, if personal guarantees were made.
Repaying a loan in the event of a key person leaving the business is rubbing salt into what will already be an emotional and difficult time for the surviving colleagues. Business loan protection can ease this trouble and mean that the business can focus on transitioning through this tough juncture.
Business loan protection explained
This type of life insurance will provide a lump sum payment to pay off any outstanding business debts if an owner or key person becomes seriously ill or passes away. Business loan protection covers most types of corporate loans including bridging finance, commercial mortgages, overdrafts, and venture capital.
Research by Legal & General shows that over 50% of businesses have a debt and the average is £176,000. If the death or illness is sudden, this can be a huge, unexpected cost that the business might struggle to cover. This could change the future of the business and its ability to survive and continue to operate.
There are several similarities to business loan protection and key person (or keyman) insurance. The main difference, however, is that with key person insurance, lump sum payments are intended to cover the cost of replacing or surviving the key person. Whereas business loan protection’s lump sum is solely intended for paying off outstanding debt. There are also tax differences between the two types of life insurance: ask an insurance adviser or your accountant for more details.
Taking out protection for business loans can be the difference between the business you’ve worked so hard to build surviving and continuing to thrive or falling into insolvency. You need to figure out what type of business insurance and corporate protection plans you should take out. Whilst it may not make economic sense to take out every type of policy, it is advisable to have insurance on what could destroy your business if you went without.
Expert business loan protection and other life insurance advice
FT Rich Mummy has a team of life insurance specialists who work daily with clients who want to protect their businesses in the event of their untimely death or that of another key member of personnel. By using one of FT Rich Mummy’s experienced business loan protection advisers, who specialises in complex cases, you can feel confident that you are getting the right advice.
There are different types of business loan protection and an independent adviser from FT Rich Mummy will guide you through the process to make the right choice. Active will take time to listen to your personal circumstances and how much you can afford to pay as well as the type and length of insurance that is required. You can focus on running your business.
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