Business loan or mortgage repayment insurance is designed to help your business cope with the unexpected. It is just a part of sensible financial planning to maintain stability within a business because the unexpected death of the business owner or key director can have serious consequences for a company carrying debt. The sum insured is set at a level sufficient to repay the outstanding mortgage, loan or overdraft to the bank or other lender.
Why do I need business loan protection insurance?
A business becomes vulnerable on the death of the owner or key director because creditors, including lenders, get nervous and can call in debts. The calling in of an overdraft or a loan from a bank may be damaging enough to tip the company over the edge. A company may never recover from this type of situation and could be forced in to administration. Your bank may offer you this type of protection when they sell you the loan or overdraft. However, this they are unlikely to offer the best terms so speaking to independent adviser to obtain a more competitive price is important.