Business Center
Center for Business
& Estate Planning
Business Planning
Satisfying Debt Obligations
Many business owners finance the expansion and growth of their business through bank loans. However, many financial institutions may require life insurance on the owner of the business to secure or collateralize this debt. Sometimes banks require repayment of the loan upon the death of the owner. A life insurance policy may provide the death benefit necessary to fulfill this obligation. The policy may be owned by the business or by the business owner individually with a collateral assignment of the policy to the financial institution. To the extent the proceeds exceed the debt, the owner of the policy can name a beneficiary for the remaining death benefit.
Consider these following scenarios
- You want to borrow money for a business expansion
- You recently purchased a business with an amount payable to the seller over a specified period of time
- You may offer a guaranteed employment contract to employees -- guaranteed whether the employee dies or is totally disabled
A Business Reducing Term policy is specifically designed to fund financial obligations which require periodic payments expiring at a given time. Reducing Term insurance can insure against a disability preventing you from meeting such fixed payment obligations as:
- salary contract and contract performance guarantees
- funding of medium term loans dependent upon the business talents of a key individual for their repayment,
- purchase agreements
Best of all, it is in addition to any personal disability insurance you may already have or may choose to purchase in the future.