Life Insurance for Business Loans

Life Insurance for Business Loans

Your bank has agreed to lend you money for your business.  You soon receive the requirements that need to be satisfied in order to close on your loan, and sure enough having a life insurance policy in place as collateral is a requirement.

While obtaining life insurance for a business loan doesn’t have to be a big deal, the amount of time required to complete underwriting may kill a deal!  Who wants to wait 6-8 weeks for underwriting approval???

We help business owners get the life insurance they need in order to close on their business loans.

If you are in a time crunch, we have options available that will help you obtain an insurance policy quickly.  In some cases, we are able to obtain approvals within 5-7 business days!

Life Insurance Underwriting for Business Loans

If you have 6-8 weeks before your business loan closing, the best option will generally be full underwriting in order to obtain the best possible rates.  We have many companies available to help you…but what if time is of the essence?

If 6-8 weeks of underwriting is too long, there is another option available to you.  We have a company available that will underwrite you within days, issue the policy, collateral assignment documents, and whatever else is needed in order for you to close on your business loan.

Underwriting Requirements for Business Loan Life Insurance

• Loan Commitment  – This company requires a copy of the loan commitment documents in order to underwrite you.
• Loan Amount – The life insurance available is typically limited to the amount of your business loan.
• Underwriting – There is a 1 page application required.  If you have significant health issues, this company may exclude death by that health condition in order to approve your policy.
• Your bank – This is not a typical policy that banks see.  You will need to get your bank to accept this policy.  We have not had problems with banks accepting this, they just need to get comfortable with it as it’s different than most policies they see.
• The Duration – This is a 1 Year Policy.  If you need it again in year 2, you have to reapply….more on this in a minute.
• The Premium – This company will require an annual premium as part of underwriting.  Premiums are typically more expensive than traditional life insurance policies.

How LifeInsuranceAdvisors.com will Help You with Your Business Loan Life Insurance

If you have enough time to go through traditional underwriting, that is generally the best option as the coverage tends to be less expensive, you can lock in a longer term policy to match your loan, and traditional life insurance policies do not exclude health conditions.

We use this type of insurance policy when time is the most critical factor, and/or when there is a health condition involved where you would either be declined or maybe postponed because you just recovered from that health condition, surgery, etc…Examples are when someone has just recently had a heart operation or completed cancer treatment….most traditional companies may postpone you for a period of time before coverage becomes available.

We typically put this type of coverage in place so you can close on your loan now.  We then start the process with traditional life insurance, get you through the 6-8 weeks of underwriting, and once we put this policy in effect, you will have this coverage in place and when the first policy comes up for renewal, we can cancel it and have a new collateral assignment issued on the new coverage.

Basically, you end up with extra coverage the first year, but it allowed you to close your business loan quickly.  In year 2, you will have the traditional coverage in place for the duration of time needed to satisfy the bank.