Life Insurance for Business Loans
The most important element when applying for life insurance for business loans is to provide complete loan documentation for insurance claims to the insurance company. Business loan life insurance policies offer three types of coverages: Life insurance protection, Disability insurance protection, and Accidental dismemberment insurance protection.
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UPDATED: Oct 28, 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.
Business loan insurance policies offer three types of coverages:
- Life insurance protection
- Disability insurance protection, and
- Accidental dismemberment insurance protection.