Is Business Loan Protection Compulsory?

We have taken out a sizeable business loan. I am wondering whether it is mandatory or just best practice to insure outstanding corporate debt?

Question asked by Claire Cook

No, Business Loan Insurance is not mandatory.

However, it’s true that many banks require Business Loan Insurance before agreeing to a business loan. This is because they want to make sure their loan will be repaid even if you pass away and your business suffers as a result.

You’ll know if your bank requires Business Loan Protection as a stipulation of your loan. Either the bank will have mentioned it or it will be in your loan agreement.

It’s always worth asking an independent insurance adviser for quotes rather than going with the cover the bank offers. This is because the bank may be tied to a few or even just one insurer, limiting the scope of their search. As a result, the bank may not find you the best deal.

I had a great experience with Drewberry, they have a lot of knowledge and expertise with life insurance and income protection and were able to advise me and arrange suitable products. Highly recommend.

Lachlan Mellings
12/08/2020
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