Don’t Leave Me a Loan
If you’re in business, chances are that you have a business loan or line of credit that you use on a regular basis. It’s just another part of running your business. It’s also likely that when you set up that business loan or line of credit, your bank had you sign not only as the company owner, but also personally, to guarantee the loan. Face it, they want to be sure they can get their money back if something happens to you or your business. It makes sense, then, to back that loan up with a Business Loan Insurance Plan.
If you happen to die prematurely, you can bet that one of the first things that will happen is that the bank will call your business loan or ask that the credit line be paid off. They don’t know what the future of your business will hold with you no longer there, so they want their money. Unfortunately, most businesses don’t have that kind of money sitting around; that’s why they have the business loan or line of credit in the first place. With a Business Loan Insurance Plan, your business (and your family) is protected.
Under a Business Loan Insurance Plan, you or your business purchases a life insurance policy on your life approximately equal to the amount of the outstanding loan or line of credit. The premiums on the policy are nondeductible. The business can be named as beneficiary, or you can name a personal beneficiary, depending on who owns the policy. The bank is protected under a collateral assignment of the policy for their interests as they may appear. In this way, the bank only receives the actual payoff of your loan or line of credit, not the entire policy proceeds, which might be higher than the loan payoff at the time.
Should you die prematurely, the income tax-free policy proceeds are first used to repay the outstanding loan or line of credit plus any interest due. The balance, if any, then goes to the named beneficiary—either the business or your personal beneficiary—to be used to satisfy any other financial needs that arise at your death. The business can move forward with one less debt to worry about, and your family can rest easy knowing that you were looking out for their interests.
For more information about how easy it is to set up a Business Loan Insurance Plan and how inexpensive it can be, contact your Pekin Insurance Agent.
Gary Tiffany, MSFS, CLU, ChFC, LUTCF
Advanced Sales Representative