Recently I worked with a veterinarian who was in the process of purchasing a practice by taking out a large loan. He was taking out a loan in the amount of $500k to be paid back in 10 years. The bank required that he show proof of life and disability insurance in order to execute the loan. The monthly payment will be $5000.
Initially he requested a quote for $5000/month benefit payable to age 65. After discussing his needs, we decided he would be better off purchasing a life insurance policy for $500k for 10 years and a disability policy specifically to cover his loan to the bank. The cost for $5000/month for a personal policy was approximately $150/month whereas the policy to cover the loan was only $40/month. Furthermore, the business policy could be paid through his business. The additional $5000/month policy would cover his personal expenses.
The business policy will name his bank as the beneficiary. If/when he goes on claim, the policy will pay the remaining benefit to the bank. For example, if he becomes disabled in 3 years, the policy will pay the remaining balance of 10 years to the bank.
By purchasing a business policy specifically to cover his loan, he will dramatically reduce his premium and still be able to protect his personal income with an individual policy.