We have taken out a sizeable business loan and I am wondering whether it is mandatory or just best practice to protect the outstanding debt?
Many thanks for your question.
Many banks will require Business Loan Insurance (usually in the form of a Keyman Life Insurance policy) before agreeing to make a business loan. Essentially they want to make sure their loan can be repaid if you pass away.
Although some banks are very strict on this there is sometimes room for negotiation.
For instance, a lender may start off by saying that every director needs to be covered for the full loan amount but I know of some banks that have then conceded to allow the sum to be split between the directors. With some banks it seems to work on a case by case basis.
I hope that helps. Please feel free take get in touch for quotes or further information.
It’s always worth asking an independent insurance adviser for quotes rather than going with the cover offered by the bank. This is because the bank may be tied to a few or even just one insurer, limiting the scope of their search and potentially not finding you the best deal.
I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.