BUSINESS
LOAN PROTECTION
Provide the funds and peace of mind to repay all business and corporate debt including commercial mortgages, directors’ loans and personal guarantees.
Protect your company's financial stability in times of uncertainty.
Many businesses borrow to invest in their operations or cover ongoing expenses. However, would your business be able to manage its loan repayments in the unfortunate event of a key employee's or owner's death or diagnosis of a critical or terminal illness?
What is business loan protection?
Business Loan protection is a life insurance product designed to assist your business in meeting obligations such as outstanding overdrafts, loans, or commercial mortgages in the event of a key individual's death, critical or terminal illness.
In the event you lose a business partner, you may want to repay outstanding business loans, some of which may have personal guarantees and are required to be repaid when someone dies.
Key individuals will usually include business owners, directors, or employees possessing specialised skills.
Why might I need it
Business Loan Protection helps to safeguard your business by ensuring that a debt secured against business assets or your residence, doesn't jeopardise your personal assets or family home.
Having Business Loan Protection in place provides assurance to all stakeholders in your business and your family. This proactive measure minimises the risk of losing your family home, especially if it has been pledged as security for a bank loan.
Banks typically require Loan Cover to be in place, often specifying that the policy is assigned to the bank to mitigate their exposure to risk.
The sudden recall of an overdraft by the bank can severely restrict working capital, necessitating the immediate sourcing of replacement funds
As for Directors' Loan accounts, any outstanding balance owing to a Director at the event of their death must be settled before their estate can be released to their family.
Personal guarantees may further amplify the risk, potentially putting your family's home at stake if, in the unfortunate event of your demise, your partner is unable to manage the debt, leaving them in a vulnerable position.
How do I set up the cover?
You will need to speak with an adviser who specialises in Business Protection. The arrangement is not as straightforward as buying some life insurance; this cover is for business use, not personal, so comes with some considerations. Your cover should reflect the amount your business owes in borrowed money. The structure of your business will also have some bearing on how the cover is arranged.
Aside from the obvious financial details, the information and documents you will need to provide for the insurance provider will depend on your business’s legal structure. If you’re set up as a Limited Company, Limited Liability Partnership (LLP) or Scottish partnership, you and your adviser will need to declare ‘ownership of benefits’ in the application.
If you operate as a sole trader, you will also need to submit a Discretionary Trust deed.
If you’re applying as a partnership, you’ll need to submit an application form, as well as a Partnership Protection Trust deed.
Rest assured, this is what we do. Feel free to contact us for a no obligation, informal chat today.