This is a life insurance policy taken out by a business to help pay any outstanding loans or other borrowings should the named guarantor die or suffer a terminal illness. Critical illness insurance can also be added to the policy, if this is suitable for the business.
The cover will provide a cash lump sum payment to the business in the event of the death or critical illness of that insured person, enabling the company to immediately repay any outstanding business loans secured against that individual/business.
Many businesses or organisations trading today will likely have at least one outstanding loan secured against them. Their funds are often secured against a specific individual within the business – the guarantor – so it is sometimes requested that Business Loan Protection is taken out.
This could be business development loans or a commercial mortgage, but often, those loans are secured against the owners, directors or other key employees in the business, which is also known as a personal guarantee.
Therefore, it is crucial your business considers in advance what the impact would be if that person were to die or be diagnosed with a critical illness.
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Please also take a look at our frequently asked questions (FAQs) towards the end of the page.
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