Business Loan Protection
Ensure your business loans can be repaid if a key person dies or becomes seriously ill.
Business Loan Protection ensures that if a key person dies or suffers a critical illness, the business has the funds to repay outstanding loans — preventing lenders from calling in debts and protecting the business from insolvency.
What is Business Loan Protection?
Business Loan Protection is a life insurance or critical illness policy taken out by a business to cover the value of outstanding business loans. If the key person who secured the loan dies or suffers a critical illness, the policy pays out a lump sum that can be used to repay the loan — removing the risk of the lender calling in the debt.
Who is it suitable for?
Key Benefits
Tax Considerations
The tax treatment of Business Loan Protection depends on the nature of the loan and the purpose of the policy. Where the policy is taken out to protect against a capital loss (e.g. to repay a loan), premiums are generally not deductible as a business expense and the payout is not treated as a trading receipt. However, the overall financial benefit of protecting the business from insolvency typically outweighs the tax cost. Tax advice should always be sought.
Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Example Scenarios
Director's personal guarantee
A director has given a personal guarantee on a £500,000 business loan. Business Loan Protection ensures that if the director dies, the loan can be repaid — protecting both the business and the director's personal estate.
Commercial mortgage
A business has a £1 million commercial mortgage. Business Loan Protection ensures the mortgage can be repaid if a key director dies, preventing the lender from repossessing the property.
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Why Choose JK Insurance Brokers?
- Whole-of-market access
- FCA authorised & regulated
- No broker fees
- Business protection specialists
- Personal, one-to-one service
- UK-wide advice