Business Loan Insurance | Business Owner Solutions
Repayment of business loan can be difficult in case of untimely death of business owner, At first place obtaining adequate debt financing is hard for a
small business. Creditors/ Institutions will often require the business
owner to personally guarantee a loan. The death of the
business owner may cause
creditors to demand immediate repayment of outstanding
business debts. This can place a significant burden on the business and
force the liquidation of key business assets at fire sale prices
at a time when business results may already be severely
impacted by the death.
In addition, the business owner may have personally guaranteed the debts/ loans incurred by the business, the owner or the owner’s estate may be liable for any outstanding debts that the business is unable to pay. If effective planning hasn’t taken place, the business may not survive the owner’s death.
A solution is for the business to purchase an insurance policy on the life of the business owner(s). Proceeds from the life insurance policy are taxfree and may be used to pay down the outstanding business debts. A creditor may require a small business to purchase collateral life insurance to protect the creditor’s interests, particularly if the death of the business’s owner could affect the value of business assets used to secure the debt. In other cases, the business owner may simply want to ensure that business debts will be fully repaid if he or she dies to minimize financial risks for heirs and to permit the business to continue free of debt.
Generally, life insurance premiums paid for business loan protection are not deductible for tax purposes. However, if a life insurance policy has been collaterally assigned to a restricted financial institution, a portion of the premiums may be deductible. A life insurance policy purchased for business loan protection can help a business negotiate loans and repay business debts with tax-free life insurance proceeds when a business owner dies. It can also prevent business owners or their estate from becoming personally liable for the business debts if the owner dies.
Options:Each business has unique needs, call us and one of our licensed experienced Insurance Advisor in the field of developing solutions for business owners shall be happy to assist; or simply have a quick quote by clicking on one of the options as under:-
1. Term Life Insurance (Online Quote) - If the need is temporary, Its best way to start, where premiums for coverage are least.
2. Permanent Life Insurance (Online Quote) - If the need is permanent, you feel there will be need of payout one day sooner or later.
Please have your Advisor Contact Me
