When a bank lends money to a business or a doctor practicing medicine (for example, a dentist or veterinarian), the lender will usually require the borrower to provide proof of disability insurance equaling the amount of the loan payments.
This insures the lender that should the borrower become sick or injured, the loan repayment will continue.
The preferred solution for this type of requirement would be a disability policy that would pay off the monthly loan payments and/or pay off the remainder of the loan balance. This, without interfering with the borrower’s personal disability insurance policy which would cover take home pay.
Typically, business overhead expense policies do not have long enough benefit periods to pay off the loans. These benefit periods are typically 12 to 18 months.
While it may be advantageous for the bank to ask the individual to assign their personal disability policy to the loan, this could be detrimental to the insured as it would deplete necessary benefits to pay for personal expenses.
Business loans can be structured in a number of ways including:
- SBA Loan
- Working Capital Loan
- Commercial Real Estate Loan
- Merchant Account Cash Advance
- Start Up Loans
- Franchise Start Up Loans
- Business Acquisitions
- Line of Credit
- Equipment Financing
- Construction Financing
- Business Only Loans
- Business Loans to purchase a private practice
- Business Loans to purchase a dental practice
- Business Loans to purchase a medical practice
- Business Loans to purchase a veterinary practice
The goal of the loan indemnification disability insurance policy is to satisfy the lender’s insurance requirements so that the loan can close without delays. Loan indemnification disability insurance provides customized benefits tailored to the stipulations of the loan agreement. Benefits are designed to cover 100% of the monthly or lump sum loan payments.
For more information about loan indemnification disability insurance or to request a quote, contact Set for Life Insurance today!