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Protect against the loss of a key person and the debts they’re responsible for
Defaulting on a loan can have serious consequences for the health and future of a business. Business loan insurance is a form of life insurance for an employee who is key to the repayments so that if they become critically/terminally ill or worst case die a lump sum payment is made to the business.
Not having the protection in place means that in the worst case scenario funds will have to be redirected from elsewhere in the business to cover the repayments, something that might not be possible and could affect the solvency and ability of the business to continue trading.
Business protection policies cannot be bought directly on the internet, a qualified advisor must be used. As Roots Insurance Brokers is part of the Vestura Group we can offer this via our sister company The Mortgage Lodge.
There are two main types of cover; level and decreasing. Level cover sees a claims payout remain the same value throughout the term, whilst decreasing does exactly that each year – often in line with the outstanding balance of the loan.
A lot of lenders will insist that cover is put in place to insure not just the life of an individual, but also to cover a range of critical illnesses – as someone is more likely to suffer a serious illness than die. We’ve a range of options to include this.
The policies are designed and put in place by our advisors so that they match exactly the length of time the business is obligated to make the financial repayments to the lender, be it a year or ten years.
The policy is in the name of the business even though the policy covers the life of an individual, and the business pay the premiums, often monthly instalments.
Not normally no – as the lender directly benefits from the policy not the business it is therefore not considered to be ‘wholly and exclusively’ for the business.
Yes. It makes sense to include the directors loan account when calculating the cover required as legally they are required to be repaid on death.