It is an insurance policy the company can purchase to protect the business against their outstanding loans/obligations/debts if one of their key individuals such as a partner or business owner was to pass away or becomes critically ill. This kind of situation can lead to financial difficulty for a company or even lead to closure of the business or personal guarantees being called in.


The policy would pay a lump sum amount to the business which will enable the company to repay any debts accounted for by the policy. Some commercial lenders insist business loan protection to be in place but even if they don’t, it is something which everyone with business debts should consider.


The main benefit is peace of mind that if the worst were to happen to you, a key employee or a partner, “the business” would be protected and wouldn’t have to worry about financial difficulties due to loan repayments. It gives some business owners a second option; loans would no longer be secured against you as the business owner or managing director but protected by insurance e.g. you may have given the lender a personal guarantee, such as your home, in the event that loans cannot be repaid.


This policy provides an alternative and ensures your family home is not affected. The policy will be set up based on your outstanding obligations, your budget and can also include an option for “Guaranteed Insurability”; this is where cover can be increased in line with an increasing loan.


The premiums are paid for by the company, with the policy ideally being written into a Business Trust to ensure that the proceeds of a claim are available to repay a loan at any time. It is also possible to assign the proceeds of the policy to the lender, at Manley Financial we will help you arrange the policy that best suits your company.