What is Business Loan Protection?

Business Loan Protection is designed to repay business debts, similar to a life and critical illness policy covering a mortgage.

It’s especially important for small businesses were loans may have personal guarantees tied to directors.

How is it Arranged?

Limited Companies: The business insures key individuals responsible for servicing the loan. Payouts go to the business to repay the debt upon death or critical illness (if selected).
Partnerships: Policies are written into trust for the benefit of other partners.
Sole Traders: Plans are written into trust for their spouse or family.

Taxation of Premiums and Proceeds

Since the cover is designed to repay a loan/liability premiums are not normally tax deductible.

However, the good news is that because the purpose of the cover is for the repayment of a debt then you should also not expect the proceeds to be taxed.

Things to Consider

Business debts can include overdrafts, invoice financing, and directors’ loan accounts, which become immediately repayable upon death. For tailored advice on structuring long-term or fluctuating debt coverage get in touch.

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Simon Dunn - Jan 2024