Life Insurance for Business Loans

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Tim is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. He writes and creates stuff for QuickQuote and other insurance and financial websites. You can find him on Twitter.

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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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