Disability Income Protecting Business Loans/Leases
Disability Insurance to protect business obligations when a Total Disability creates an inability to meet financial obligations requiring periodic payments over a fixed time period.
Ideal Candidate Any business where the obligation rests with a single principal and whose loss would place the business, and therefore the business loan/lease, in serious jeopardy.
Problem A Total Disability potentially affects the loan/lease repayment relationship. As long as the business owner is working, the loan/lease may be paid from earnings. But, what happens if a total disability strikes? How does the business owner and lender/lessor address this contingency? Lenders often require life insurance to secure a loan, but this is of no help against the far greater risk of total disability
Solution Disability Insurance to protect business obligations. A Total Disability may create the inability to meet financial obligations requiring periodic loan/lease payments over time. Through a covered disability, business owners are better able to protect their company, their investment and their personal assets. The lending institution/lessor, is better able to maintain their revenue stream.
The monthly benefit is paid directly to the loss-payee, i.e., the lending institution, or lessor, via a Collateral Assignment.
- Purchase Agreements – e.g., to protect the seller when purchasing another practice or firm
- Salary Contract Guarantees – such contracts often include an obligation to pay an employee
even when the employee has become disabled - Business Loans – to cover loans for business expansion should you become disabled
- Contract Performance Guarantees – similar to Salary Contracts Guarantee above, but
designed for contractors - Business Leases
- Available amounts are in addition to any personal disability insurance you may have or any you may purchase in the future.
- Available to new firms and is often the only disability income coverage a new firm can obtain.
- May provide an edge in securing loan/lease approval.
- Collaterally Assigned Life Insurance from a quality portfolio of insurers is also available, frequently using the same exam.
