Business Loan Protection

A type of policy that covers outstanding debts should the guarantor of the loan pass away. Caspian can help your business decide if this cover is right for you.

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Business Loan Protection Insurance

What is Business Loan Protection?


It is a routine part of business to have one or more outstanding business loans secured against them, whether it is commercial lending, director’s loans, overdrafts or credit cards. In some cases, these business loans are secured against the business’ owner, director or other key individuals within the company.

If the person liable for the loan was to pass away, how would the business fare in paying off that debt? If it would cause serious financial implications for the business, you might want to consider taking out a business loan protection policy.

Business loan protection can also sometimes be known as business liability or commercial debt insurance policies.

How does business loan protection work?

If a guarantor of a business loan, such as an owner, director or other individual, was to pass away the lenders may ask for the debt to be repaid immediately. This can sometimes cause financial strain on the business, which is already suffering from the loss of a key person.

Business loan protection can provide the necessary pay-out for the business to cover the outstanding debt. A policy of this kind works by covering the life of the key individual(s), so that any money from a claim can be used to clear the outstanding debt or loan.

Business loan protection is usually in the form of life insurance on its own or with critical illness cover included. Premiums are usually paid by the business.

Many lending options for businesses are caveated with this requirement, but the policy can still provide an immediate lump sum to help with any debt.

How much business loan protection cover do you need?

Deciding on the right amount of cover for a business loan protection policy is quite simple. The level of cover should reflect the amount that would be needed to pay the outstanding debt or loan. The policy could be set on a level or decreasing basis, depending on the type of debt you may need to pay off.

The monthly premiums will be calculated based on how much cover the business has taken out.

Why should you consider business loan protection?

You never know what is round the corner. Business loan protection can protect your business against the unexpected, minimising the financial hardship that may come from losing a key member of the team.

Having to suddenly repay outstanding debts could cause financial burden and may even put the future of the business at risk.

A business loan protection policy can help to stabilise the business, providing a way for loans and debts to be covered at no expense to the business. It allows the business to clear any lending that must be paid back and continue trading as normal.

If you would like some further guidance on whether your business would benefit from taking out Business Loan Protection, get in touch today.

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