Is Business Loan Protection Compulsory?
Question asked by Claire Cook
My business is growing rapidly. We’ve recently taking on some corporate debt to fund further expansion so I’d like to look at Business Loan Insurance. However, there’s more than one person responsible for repaying the debt. How does this work with this type of insurance?
Business Loan Insurance is repays outstanding corporate debts should an individual or individuals key to repaying the loan pass away or become critically ill.
If there’s more than one person in the business responsible for repaying the loan, you’ll have to look at the original loan agreement to determine how your company holds the loan before you can proceed with cover.
How you and the lender structured the loan may have an effect on the type of insurance you need.
If the two parties are jointly liable, it is possible to have a single policy written on a joint life, first death basis. This will pay out to cover the entire loan if one party to the loan passes away or becomes critically ill.
BUSINESS TIP
If multiple key people are responsible for the loan it may sometimes make sense to set up individual policies. This is especially true where there’s a wide discrepancy between the ages and health of each party, as well as the percentages of the loan each party is responsible for.
For help and advice in this area, don’t hesitate to drop us a call on 02074425880 or email help@drewberry.co.uk.