Life Insurance for Business Loans

UPDATED: Feb 25, 2020

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Most life insurance companies will issue a policy on an individual for the purpose of covering a business loan. Guidelines will vary by the company of course, but most are similar to the following:

  • At least five years remaining on the loan.
  • Coverage amount up to a maximum of 75% of the loan, prorated for the insured’s percentage ownership of the business.
  • Coverage amount is based upon the amount, purpose, duration and interest rate of the loan.
  • Venture capital may be limited to a maximum of 50% of the loan.

The most important element is to provide complete loan documentation to the insurance company when applying for this type of life insurance policy.

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