The CBILS has been designed by the government to support the continued provision of finance to smaller businesses (SME’s) who have and are experiencing lost or deferred revenues, leading to disruptions to their cashflow as a result of the Covid-19 outbreak. The scheme supports a wide range of business finance products, including terms loans, overdrafts, invoice finance and asset finance facilities.

Without this scheme many SME’s would struggle to operate and possibly cease to trade meaning that this intervention made by the government has been much needed. What would happen to the business however if one or more or the business owners passed away or is diagnosed with a critical illness? In a normal circumstance the loan will still need to be repaid and the funds used for this purpose will eat into any potential value in the business that tends to be passed across to family members in the form of a shareholding or cash sum.

As a result, should some form of Business Loan protection be considered?

What is Business Loan Protection?

Business Loan Protection helps the business pay any outstanding borrowings such as a loan or commercial mortgage, should the person(s) covered die or become diagnosed with a specified critical illness. In some situations insurers are also able to consider including cover for overdrafts or director loan accounts.

How does Business Loan Protection Work?

Business Loan Protection is either life assurance or life assurance and critical illness cover written on the life of the key individual or individuals so that any money due can be used to pay towards any outstanding debt or loan. The money will be paid to the business where it is a company, Limited Liability Partnership (LLP) or Scottish Partnership. Where the business is a partnership, the policy will be written on an own life basis and may be placed in trust for the other partners.

How much cover do I need?

The level of cover reflects the amount needed to pay the outstanding borrowings. The policy should be set up to reflect the terms of the borrowings and could be on a level or decreasing basis.

There are various issues to consider around Business Loan Protection and these are highlighted below:

  • What would you do in the event of the loss of the individual or individuals who have guaranteed a loan?
  • What would you do if an overdraft, loan or commercial mortgage is unable to be paid due to the loss of a shareholder or director?
  • Director loan accounts should be repaid on death – where will this money come from?

If Business Loan Protection Insurance that you are looking to discuss, please contact Wingate Benefit Solutions on 01883 332260 or at info@wingate.com and we will be able to help.

The outbreak of Coronavirus has left many people asking about life assurance and whether their existing cover is sufficient in the event of the unthinkable happening. More often than not there are no issues with cover being satisfactory, but we would always recommend that if you have concerns, you should ask your adviser or insurer for guidance/advice.

For most people, there is an element of cover in place whether this be through a personal arrangement or through cover provided by your employer however as a business owner, what provisions have you taken for yourself?

If you pass away, how do any business loans in place get repaid?

If you pass away, what legacy is left for your family?

If your top salesperson, account manager, product designer or any other key person passes away, what effect would this have on the income that the business receives?

It may well be that after these questions have been asked of yourself, you feel that no provision is required and that you are happy to take the risk of not putting cover in place and this is absolutely fine.

It may also be that after these questions have been asked of yourself that you want to review your existing provisions and to understand the cost of putting all or some of this cover in case.

At Wingate, we offer a fee free review service which allows us to work with business owners to understand what cover may be required, how this cover could be implemented and importantly what price this cover may cost. If you feel as though a review or conversation may be beneficial, please contact us at Wingate on info@wingatebs.com or (T). 018883 332260.

Protecting Vulnerability in Businesses

The loss of influential individuals through death or serious illness can be hugely detrimental to a company’s financial position, yet this vulnerability is often overlooked when considering the firms insurance needs.

We can provide advice and insurance solutions to protect against these risks.

Our unique Key Person facility means you can obtain Life Insurance for the key people within your business WITHOUT THE NEED FOR MEDICAL UNDERWRITING or any declaration of hazardous activities. 

This facility is designed to avoid key persons spending time completing detailed forms and attending medicals when they would prefer to be focusing on the business

Provided the person(s) to be insured meet the eligibility conditions* you can secure £250,000 of death cover per individual through the completion of a simple one page application form with fixed premiums based on the person’s age – enabling you to put this important cover in place immediately.

 Key Features

  • Cover of £250,000 per person without the completion of any medical underwriting or consideration of hazardous activities, factors which delay the process of obtaining cover
  • Multiple key persons within the same company can be insured under a single policy
  • The policyholder is the business, which will receive payment of the lump sum on the death of a named Key Person
  • Policies are for a 3 year term and can be extended for further 3 year periods
  • Competitive premiums
  • Premiums are paid annually in advance
  • Cover is available under the facility for up to £10,000,000 for each Key Person. However, for cover above £250,000 medical and financial underwriting will be required

*Eligibility conditions:

  • Cover is available for individuals with UK contracts of employment for companies
  • The Key Person(s) must be ‘actively at work’ on the start date of cover, working normal contracted hours in permanent paid employment and not have suffered from an accident or illness which prevented them from carrying out their duties for 10 or more consecutive days in the previous 12 months.

It’s as simple as that, provided these conditions are satisfied cover can commence immediately.

£250,000 of Life Insurance for key personnel via completion of a one page application, with no medical underwriting or details of hazardous activities

For further details and a quote please contact:

Jon Bird

T:   01883 332269

E: jon.bird@wingatebs.com