Business loan protection is designed to provide a business with the funds to repay commercial loans or mortgages should one of the business owners suffer a critical illness or death. You can protect the full value of the loan or mortgage and payment is usually made to the business. It is essentially a life-insurance policy with critical illness included, specifically designed to cover business loans and commercial mortgages.

Business loan insurance provides a company with a lump sum to repay business loans or mortgages if one of the business’ owners, who are often critical to repayment of company debts, suffers a critical or terminal illness or dies. If a claim is made the funds would either be paid to the business, or the loan provider direct.

Business loan insurance can be taken out on either a ‘level cover’ or ‘decreasing cover’ basis.

Decreasing cover premiums fall in line with the repayment of the loan itself, so as the loan is paid off, the level of business loan insurance will also fall accordingly.

Level cover is normally used for interest-only loans and ensures that the insurance covers the outstanding debt until it is repaid in full at the end of the loan term.

Many businesses take out loans to start up a company or to expand their operation. And their ability to repay often rests on a few key people. Insurance helps to pay an outstanding loan if any of those key people were to become critically ill or die.