Business loan protection insurance is a way for companies to cover themselves financially should they assume the liability of outstanding business debt following the unexpected death of one of the directors, owners or senior personnel, or should they fall seriously ill. The policy can offer a cash injection to the company which they can use to repay the loan in full or to pay back the funds in instalments as per the terms of the original agreement. Insurers can also assign policies directly to lenders and pay the proceeds to them directly. Many lenders require arrangements of this kind as a form of security for the loan.
Business protection insurance can be the make or break of a company’s survival following the death of a key member. Most insurers offer business protection insurance as a package policy which can cover a range of liabilities that a business may face following a team member’s unexpected departure. Business loan protection is just one of these types of policy, typically offered alongside key person protection, shareholder or partnership protection and, sometimes, relevant life.
When choosing an insurance supplier for your business loan protection insurance, you must first determine the types of cover you require. Business loan protection is just one of a range of policies often included in a business protection package plan, alongside key person cover, shareholder protection and relative life cover. You may save money on your premiums when taking out a comprehensive business protection policy.
Finding a Policy & Provider
When looking for a business loan protection policy, companies should consider the risks they’d face if they were to lose anybody in the company to determine the types of policy they require. Businesses can save money on premiums and receive more extensive cover from insurers who can offer them a packaged plan. Once you’ve established the types of policy and the level of protection you require, there are three ways to find an insurance provider.
- Approaching suppliers directly – You can find details of the policies offered by various providers by looking on their websites and contacting them over the phone. When comparing policies, you should consider the features of cover each supplier can offer, the price of the premiums and any additional benefits that may come with the plan, such as access to medical experts, further treatment or complimentary counselling services. Many insurers will have specialist advisers available over the phone to build a policy which caters to your company needs.
- Going through a broker – Brokers act as an intermediary between you and the insurance provider. They have access to a far broader portion of the market than the general public, which puts them in a strong position to find you exclusive deals with more extensive cover, often for more competitive prices. With such an intricate policy, it can be helpful to capitalise on the experience and expertise of trained brokers, who can help find appropriate cover to suit the unique needs of each person to be insured. They are often able to find flexible solutions and negotiate terms which offer your business the maximum protection for the best price.
- Comparison websites – It can be both time-consuming and challenging to compare multiple policies from countless providers. Comparison websites can be a helpful starting point for anybody beginning their research into business loan protection insurance, as these sites can show a range of policies on offer in one place. You can also filter the search results according to specific criteria to find products that better correspond to your insurance needs.
This list below provides an overview of some of the insurers on the market, offering business loan protection insurance.
Business Loan Protection Insurance Providers
Legal & General
One of the leading providers of business protection insurance is Legal & General, who recently conducted their sixth research report into the business protection needs of UK businesses. They can offer extensive cover limits, with no maximum sum assured for life cover only, and up to £3 million if the company chooses to add critical illness cover. Policies can be arranged on a level, increasing and decreasing life basis, as well as the option to cover whole of life.
Legal & General can offer flexible policy terms, ranging from one to fifty years. An accidental death benefit is included as standard, as is terminal illness cover for all policies with a term of at least two years. All plans also include access to the Nurse Support Service provided by RedArc, where policyholders can access a second medical opinion, mental health support and support for carers. Their commercial policies are available through intermediaries.
AIG
A variety of business types can secure business loan protection insurance from AIG. Flexible policies can be built around the needs of each company, depending on the size and types of debt the individuals have. Companies also have the option to choose adjustable coverage, which can change in line with changes made to the loan. Customers can choose policies for a specified term or on a five or ten-year renewable basis, with the option of level cover or a reducing benefit structure.
One of AIG’s primary selling points is the two services they offer with their life assurance policies: the Best Doctors service and Smart Health. The former can offer valuable second medical opinions to the people insured, and Smart Health allows employees to manage their health with access to top medical professionals and on-demand consultations with GPs in the UK. AIG’s policies are available exclusively through brokers and intermediaries.
Vita (Broker)
Established in 2010 and already boasting an impressive 4.9 out of 5-star rating on Feefo, Vita work with a large number of UK insurers to offer extensive business loan protection. They can provide level cover policies for interest-only loans as well as plans with decreasing cover, and can insure a wide variety of outstanding debts, including commercial mortgages, overdraft facilities and business loans. They can also offer combined policies with shareholder protection and key person cover. They can offer free, expert advice over the phone, or you can obtain a quote on their website in a matter of minutes.
VitalityLife
Flexible, competitive policies are available from Vitality, a leading health and life insurance provider. Their package deals include business loan protection alongside shareholder and partnership protection and key person protection. They can also offer one of the most extensive critical illness policies on the market, insuring up to 138 conditions on their standard cover and 167 through their comprehensive cover.
One of the biggest perks of taking out a policy with Vitality is access to their Vitality Programme, which offers financial rewards to companies whose employees make positive lifestyle changes for a healthier future. Employees can track their fitness each week and enjoy regular discounts from Vitality’s partner companies. By earning Vitality points, companies can even receive discounted premiums on their insurance plan. You can speak to one of their dedicated advisers by phoning directly or requesting a callback at a time that suits you.
A-Plan (Broker)
With more than 50 years of experience providing life and health insurance, A-Plan can create competitive policies that cater to each company’s insurance requirements. They have access to the most extensive panel of life and health insurance insurers in the UK, and their CII qualified advisers are on hand to arrange bespoke policies tailored to the needs of each company, with the ability to cover a wide range of business debts. You can generate an online quote through their website by completing a short form or phone them directly to arrange cover.
Royal London
A comprehensive business protection insurance policy is available from Royal London, who can integrate business loan protection into a package policy alongside key person replacement, life cover for employees, key person protection and shareholder and partnership protection.
All policyholders have access to their extensive Helping Hand service which includes a wide variety of support services: a legal helpline to assist companies with employment law, a recruitment helpline to help with sourcing replacements for key personnel and a dedicated nurse. The nurse can recommend additional services including support for recovery from a heart attack or stroke, a second medical opinion following a diagnosis and bereavement counselling. Policies can be arranged through a financial adviser.
Moneysworth (Broker)
Established 17 years ago, Moneysworth is an expert life insurance broker, specialising in life insurance, critical illness cover and income protection cover. They have a 4.9 out of 5-star rating on Feefo, earning them the Gold Trusted Service Award 2020. Their life insurance for business owners can include a business loan protection plan to assist companies in paying off outstanding debt, including overdrafts, business loans and commercial mortgages, in the case of death or critical illness. You can access a quote online or over the phone.
LDNfinance
Established in just 2017, LDNfinance uses a team of friendly professionals to offer bespoke solutions across a range of sectors. Their business protection insurance range comprises shareholder and partnership protection, executive income protection, key person cover as well as business loan protection. Their loan protection product can cover commercial mortgages, overdrafts, venture capital loans and other business loans, offering peace of mind in the case of both death and critical illness.
They can arrange flexible cover with the possibility to add a range of add-ons including the option to increase the value of the sum insured during the policy to protect additional loans that may be taken out later down the line. You can make an enquiry through their website.
Towergate Insurance (Broker)
Business loan protection insurance is available through Towergate Insurance, as part of an all-encompassing business protection insurance policy. This product safeguards the survival of businesses against a range of risks they may face following the loss of a vital employee, through their loan protection, key person insurance, shareholder or partnership cover and employee life cover. Towergate have an excellent customer service rating on Feefo, rated 4.6 out of 5 based on over 10,000 reviews. You can generate a quote using their online tool in just a few minutes, or speak to one of their dedicated advisers over the phone.
Spectrum FA (Broker)
Businesses can expect a personal, friendly approach with Spectrum FA, who can arrange competitive cover from a range of leading insurance providers. Their personal approach provides a friendly, conscientious service, made up of a team of expert advisers who can use their in-depth knowledge to recommend appropriate products. Their products can cover a range of business types for their outstanding debt, including commercial mortgages and business development loans, secured against managing directors, owners or other key personnel within the company. You can get in touch through their online contact form, on the phone or by email.
Caspian Insurance (Broker)
Based in Manchester, Caspian Insurance is a leading life insurance broker in the UK. Caspian can offer business loan protection as part of their extensive business protection product line. They can cover a range of debts secured against the director, business owner or other key members of staff, whether that’s commercial lending, directors’ loans, overdrafts or credit cards. They can find a variety of flexible products to cater to your business requirements, from policies including critical illness cover, level term life insurance or a packaged product. You can contact their dedicated team of UK advisers over the phone or use their Live Chat feature on their website for quick queries.
Summary
Business protection products are some of the more confusing insurance solutions on the market, as they are determined based on the personal risk profile of each insured person, taking into account lifestyle choices and their medical history, as well as their individual liability for each loan. For loans guaranteed by multiple business partners, more than one policy may cover the same debt, each insuring a different amount depending on how much the individual is liable. Due to the complexity of the product, it is a type of insurance often offered by specialist business protection providers, or by suppliers that only provide life assurance products.
It’s important to note also, the extent of coverage you choose also has a bearing on the price. Critical illness cover is typically far more expensive than life assurance cover, as it can provide coverage for a large number of severe illnesses and conditions, usually around 40. Some insurers may cover over 100 conditions, though these policies may be more expensive. Other factors which may affect the price include the occupation of the insured, as riskier jobs tend to result in higher premiums.
