11 Purdeys Way Purdeys Way, Rochford, England, SS4 1ND
11 Purdeys Way Purdeys Way, Rochford, England, SS4 1ND
Protect Your Business From the Unexpected – Get a Business Loan Protection Quote Today
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If your business relies on a loan or overdraft, what would happen if the person responsible for repaying it could no longer work — or worse, passed away unexpectedly?
Business Loan Protection insurance provides a safety net, ensuring that outstanding debts can be repaid quickly, protecting your company’s future and avoiding financial strain on surviving directors, shareholders, or family members.
Imagine this Scenario within your business:
David and Sarah run a successful consultancy firm. They took out a £250,000 business loan to expand the company. If David — the managing director and primary guarantor — died suddenly, the business could struggle to meet repayments.
Business Loan Protection ensures that if something happens, a tax-free lump sum would clear the debt, keeping the company financially stable.
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Here’s how Business Loan Protection helps secure your company:
It’s a simple way to protect your company from unexpected debt and keep your business on stable ground.
Whether you’ve taken out a loan for the purpose of getting your business off the ground or whether you’re leveraging one to oversee growth or expansion, your ability to repay this debt is likely intrinsically linked to the fate of key personnel. This might be you or another founding member of the team. It is the vision, leadership and guidance of these key personnel that gives your business the identity that resonates with your target market and the strategy it needs to ensure that performance goals are consistently met or exceeded.
While your business may be able to function without you or them, transitions of leadership are often tumultuous for businesses of all shapes and sizes and your profits may be adversely affected. This in turn can put increasing pressure on your business’s cash flow which in turn can make paying off unpaid business debts increasingly untenable.
If your business reaches a position where it is no longer able to pay its debts following your death or the death of another key team member, it may have no choice but to become insolvent. Thus, this can make all the difference between leaving a lasting business legacy for your family and employees or the brand you have worked so hard to build fading into obscurity.
Of course, we all assume that this eventuality will never happen to us or that our businesses are robust enough in their operations to manage without us. However, data from Legal & General indicates that 39% of company directors expect their company to fail within 18 months of the death or serious illness of a key team member.
When you compare Business Loan Protection, the policies will vary depending on several factors. It comes down to the individuals that are going to be insured, along with the amount of cover that’s needed.
Premium costs also depend on the age and health of the life assured as well as their position’s inherent risk factors. A smoker, for example, can be much more expensive to insure than someone who is a non-smoker.
There are various benefits of Business Loan Protection, including the following:
It’s important to compare Business Loan Protection policies to find the right one for your company. This requires a careful assessment of your business’s financial needs, key personnel, and loan details. You need to review all outstanding business loans, including amounts, terms, and any personal guarantees tied to them. Identify which loans need coverage, as the policy should ideally cover the total loan value.
Next, you need to identify the business owners, directors, or key employees whose absence could impact the business’s ability to meet financial obligations. This typically includes individuals who personally guarantee loans or contribute significantly to the company’s revenue or operations.
You’ll also need to consider the loan term and match the policy term to it. For example, if the loan has a 10-year term, you’ll need to select a 10-year policy.
You need to ensure that the policy can cover the full amount of the loan, without leaving any shortfall. You will also need to factor in interest that accrues over time and any fees for early repayment or administrative costs. You may want to add Critical Illness cover to the policy if losing a key person due to critical illness could impact the loan repayment. This option provides extra security if the insured person is unable to work due to illness, such as cancer, a heart attack or stroke.
It’s also a good idea to get shareholder protection insurance, as this ensures shares can be bought back by the company if an important shareholder dies or becomes critically ill. Meanwhile, relevant life cover will pay out to an employee’s beneficiaries should they die or become critically ill.
When you take out a loan, you never know what’s around the corner. If a key person in the company dies, such as the founder or director, the company may not be able to repay the loan. And just like with any loan, failure to repay the money could result in assets getting confiscated from the company or cash flow problems.
Without the founder or key person, the company could lose sales or close down, which means the lender might seek repayments from elsewhere, such as the guarantor of the loan. Business Loan Insurance helps protect your company in case the worst happens. The cover will help pay for the remaining funds of the loan should a key person in the business die.
No, Business Loan Insurance isn’t usually tax deductible as the lender, rather than the business, directly benefits from the cover. The insurance is specifically for the capital purpose of repaying a loan.
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Submit the details of the key member of staff
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Jody was very helpful in explaining the options and I thoroughly recommend his company
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
I had a great time working with My Key Man Insurance when I applied for the different insurances they offer. They were able to answer all of my questions quickly and effectively. I will recommend them to my friends and family.
Jody was very helpful in explaining the options and I thoroughly recommend his company
The standard of service was first class. They kept me up to date with progress on my Relevant Life Policy, followed up promptly following delays caused by my medical practice being slow in compiling reports, and responded instantly and clearly to any questions I had.
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
Jody was very helpful in explaining the options and I thoroughly recommend his company
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While it isn’t a legal requirement, Business Loan Protection is an important insurance to have. The policy protects your business and personal assets if a key person dies or becomes critically ill. It will help ensure the loan is repaid back in full, without causing cash flow problems for the company or causing directors to pay out-of-pocket.
You can get a quote from us using our simple online form. We’ll help you compare Business Loan Insurance to find the cheapest and best policies in the UK to protect your company.
Business Loan Insurance covers an outstanding loan should a key person die or become critically ill. Comparatively, Key Person Insurance gives the company a lump sum should a key person (such as a founder or top salesperson) dies or becomes critically ill.
Business Protection Insurance lasts as long as the loan repayment term. For example, if the loan’s term is 10-years, you need insurance for 10-years.
As the capital purpose of the insurance is paying off a loan, it isn’t a tax-deductible expense.
When you compare Business Loan Protection, you can choose between two types. Decreasing cover falls with your loan, which means it reaches zero by the time your loan is fully repaid. On the other hand, level cover is fixed and typically used for interest-only loans.
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