Life Insurance For Business Loans

There are many ways to secure loans in Canada to help you get your business off the ground. There are short-term loans, lines of credit, construction loans, term loans for permanent financing. And those are just a few of the types of loans available.

But how do you protect a business loan once you score one? That’s where life insurance for your business comes in. When you incorporate life insurance for business loans into your company’s financial plan, it provides an unmatched blanket of security. Here’s how life insurance for business loans works — and some of the many options that could work best for you.


Business Loan Life Insurance Basics

Developing and launching your business likely took years of planning and hours of daily sweat equity. Sustaining your business can be just as challenging, including overseeing employees, attracting new business, and keeping the books balanced.

Life insurance for business loans protects all that you’ve devoted to your company. It protects you and your business partners from debt and helps you plan for even an uncertain future. With a business loan insurance plan, you and your business can cope with unexpected life events smoothly, even those that would usually threaten the very survival of your company.

With business loan protection, you and your business partners and other vital employees are protected if any of you are unable to work because of a disability, pass away or leave the business. With life insurance for business loans, you have a way to make regular payments on loans, lines of credit, or your credit card.

You won’t need to worry about any loan amounts that are outstanding. With a life insurance policy, those loans can still be fully paid as you work to get your business back on the right financial path.

Generally, life insurance for business loans greatly reduces risks related to owning and operating businesses small and large, including finicky economies and other unpredictable factors. Loan collateral life insurance is also a good option for those who simply have trouble fully funding their company to get it started.

Such life insurance, especially within term life insurance policies, the cost is affordable for small businesses. Forms of collateral that can be used on a business loan include cash, stocks, certificates of deposits, treasury bonds, and corporate bonds. Business owners can also use equipment, cars, real estate, and inventory as forms of collateral.


Eligibility for Business Loan Protection Insurance

Eligibility for life insurance for business loans varies across Canada and financial providers, but it’s insurance that’s typically in reach for most companies and business owners. Typically, you need to be an owner, partner, or co-owner of a business and live and operate in Canada to apply for business loan protection through a term or whole life insurance as a business owner. If you choose the whole life insurance option vs term, you can get the benefit of an accumulated cash value in your whole life policy.

Sometimes, you can even be a shareholder who owns at least 10% of business shares.

Many different types of loans are eligible for coverage. This includes small business, commercial or farm loans, as well as mortgage loans, business-related personal demand loans, or other loan credit agreements you already have with a bank or financial provider.


Life Insurance for Business Loans Coverage Options

Similar to life insurance for individuals, life insurance for business loans comes in many different forms. It all comes down to your individual needs or the needs and goals of your business. Different business loan insurance plan options include life insurance policies such as whole life insurance, term life insurance, and and universal life insurance. As a business owner you have the option to just choose life insurance or life insurance with critical illness or disability coverage.

Each coverage plan has features different types of protection for your business. Just having life insurance covers you and your business if an owner, key employee, or guarantor dies after coverages go into effect. It can help businesses pay off outstanding loans through payoffs related to each insured person.

Adding Critical illness coverage to your key employee life insurance policy offers financial help when a key employee or owner has a critical illness and disability coverage comes into play when an owner cannot work because of a disability.


Other Benefits of Life Insurance for Business Loans

One of the biggest bonuses for your business is if you chose to enroll in a business loan insurance plan: you don’t need to reapply for coverage if you secure an additional loan. The balance of your new eligible loan is likely to be covered up to your original insured amount.

By helping to protect your business debt, business loan insurance plans protect you and your family’s livelihood. Your home equity, assets, personal insurance and savings are kept intact when your business debt is insured via life insurance. When you do your complete estate planning, you can use an estate life insurance policy to make sure all your assets ate protected.

Additionally, your premiums under many business loan insurance policies are based on daily outstanding balances since it tracks your operating line or business term life insurance.

Your business will only pay life insurance premiums based just on your selected coverage and the balance of your credit  — and you pay nothing at all when you have no outstanding balance.


Discover the Insurance That Works Best For You

When considering life insurance for business loans, owners can greatly benefit from a bit of help navigating through the many options available.

Working with Sim Gakhar means you have a knowledgeable guide by your side. Sim, a life insurance agent and investments advisor serving customers across Ontario, Canada & BC, Canada can help you find the best life insurance for business loans that fit perfectly within your unique business goals.

Sim is an advisor with HUB Financial as her MGA. By working with more than 30 life insurance companies within Canada, HUB Financial advisors like Sim are well-versed in the range of policies, rates, and coverages that aren’t just available to you — but work best for you.

To get started today, reach out to Sim Gakhar directly, either by phone (647-889-7290) or via email at [email protected].

Business-owned life insurance for loans offers you, your family, and all of your important employees an unmatchable peace of mind. By working with Sim you can make sure that your business is fully protected.


Essential Planning for Financial Security

Helping business owners and self employed professionals grow retained earnings tax-free, pass more wealth to the next generation, and protect their biggest asset – themselves, the key person of the business.

Book A Call


Other FAQs Regarding Life Insurance as a Business Owner


Other Life Insurance Products You May Like




get quotes