Many businesses take out loans to start up a company or to expand, with the ability to repay loans often resting on a few key people. Having business loan insurance can help to pay an outstanding loan if any of those key people were to become critically ill or die.
Business Loan Protection is designed to repay outstanding business debts if a key person or guarantor dies or is diagnosed with a critical illness. It provides a lump sum that helps the business meet its financial commitments, such as commercial loans, overdrafts, or director loan accounts.
If your business relies on one or two individuals to personally guarantee loans or if you’ve taken out finance to grow, this type of cover ensures those debts don’t fall to the remaining partners, directors, or shareholders.
What can it cover?
It can cover bank loans, commercial mortgages, director’s loans and venture capital or private investor funding.
Why it matters:
• Protects business assets from being sold to repay debts
• Prevents financial strain on co-owners or surviving family members
• Meets lender requirements, which may demand cover as a condition of the loan
• Supports business continuity through difficult periods
At Oviso, we work with you to understand your business’s liabilities and recommend cover that aligns with your current borrowing. We’ll make sure the right structure is in place, so your business is protected and your financial plans stay on track.
With so many options to consider, it can seem very confusing. So, to help you out we've answered some of your most common questions. For more specific advice about the options available for your circumstances, why not get in-touch with one of our friendly advisors.
Most types of business loans can be protected, including:
– Commercial loans and mortgages
– Venture capital loans
– Director’s loans
– Personal guarantees
Before taking out business loan protection cover, you will need to consider the following:
Under the terms of a loan, owners may be jointly liable, severally liable, or jointly and severally liable for the repayment of the loan.
Once this information is clear, you can set up a suitable policy for anyone responsible for the repayment of the loan. A loan protection policy can be taken out to ensure repayment of a business loan in the event of the death or critical illness of a shareholder, partner, member, director or sole trader.
You can select a decreasing or fixed sum assured, but the term of the cover needs to match the term of the loan.
To find out more about mortgages, personal insurance, business insurance and protection or to discuss the options available for your circumstances, contact our team of advisors
