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A Financial Institution can protect itself when offering their customer a loan, business mortgage and/or a line or credit by requesting the business owner obtain creditor life insurance. Their creditor life insurance policy will provide funding to pay off the loan, mortgage or line of credit if the business owner that borrowed the money dies prior to the loan, mortgage or line being fully repaid. The creditor offered coverage can be mandatory or voluntary, depending on the type of loan and the lender’s requirements. The life insurance coverage is especially important if the owner’s day to day activity creates the main source of revenue for the company.
Life insurance provided by many lending institutions can be expensive. This coverage is generally underwritten at the time of claim and is product that has not had many innovations or price decreases in decades. The coverage itself is issued on a group basis and relies on a pricing structure that is different than that of individual policies.
Contact a Representative at Bayside Associates to learn more about the advantages to holding your own life insurance policy to wipe out the company debt upon your death and to learn about all the tax advantages your company can gain by planning properly.
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