So you decided to start a new business or looking to expand an existing one and need to get a business loan. This can be a wonderful idea, but as you may already know there is one last step. The bank has required you to get a life insurance policy for the purpose of securing a loan. Just when you thought that you jumped through every possible hoop, now this. Well, not to worry because we will discuss how to get this done fast and easy.
Banks have recently gotten back to the requirement of making sure you secure a life insurance policy before stamping your loan application “Approved”! This is for a good reason because they want to ensure that if something happens to you the loan will be paid back. It is even more crucial when you are the most important part of the business. Whether you are getting a traditional or an SBA loan, it’s common for you to be required to get the same amount of coverage as the size of your loan.
Okay, so here comes the solution. You can buy a lot of coverage for an affordable monthly payment by choosing a term policy. There are term plans ranging from one year all the way to a thirty year term, so quite a few options to choose from. But be careful when picking a company, especially if the bank is requiring specific changes to the policy that you own, because not all companies are going to give you the green light. For instance, if the lender wants you to transfer ownership to them while they are also the beneficiary may raise issues with the majority of insurance companies. So it’s important to work with an independent broker who knows which companies to pick.
Once you find the right company, it’s time to complete the application along with a medical exam. When this is done, it will usually take around 3-6 weeks to get approved and receive the policy. As the saying goes “Time is money” and most business owners can’t wait that long just to get a policy for a loan. That’s exactly why most of our clients opt for a simplified issue policy which can be signed electronically and without a medical exam. The best part is you can get approved within 24-72 hours.
Depending on the company, you can simply list the lender as the beneficiary which is the easiest way. However, it is more likely that you will have to fill out a collateral assignment form and send it back to the carrier. This pretty much sums up the entire process.
Now here are some extra suggestions that can help you out. First be sure to shop around for the best priced policy and not just go with what the bank is offering. Also remember that you can buy a return of premium term policy which is at no loss to you, since these policies are designed to give you all of the payments back at the end of the term if there was no claim filed. Finally, be sure to have something on paper stating that you want the death benefit to cover the loan balance and have the rest go to your family.
Regardless of your situation we can help you from point A to Z, so don’t hesitate to call, chat or email us. If you want to get some pricing information you can run no exam quotes here. Thank you for reading and hope you enjoyed the article.
