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Note
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- Also called keyperson loan
- Not to be confused with a personal loan for a businessperson
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Cover
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- Life, TPD (incl. WoP)
- According to loan duration and amount
- Longer duration is possible, if the credit facilities are renewable
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Purpose
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- Often required by the bank (among other guarantees)
- Reimburse outstanding loan amount
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Beneficiary
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Bank
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Insured
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- Managing director
- Joint covers possible for partners
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Evidence
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Depending on sum assured:
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Income
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Usually a 3-year average should be used. Be careful with trends, high deviations, and one-off payments.
Business loan
- Net profit before tax (regardless of share)
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Calculation
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No uniform calculation
Points to be considered:
- Sum and duration should match that of the loan
- Borrower should be insured
- If multiple borrowers take out policies for the same loan, overinsurance can occur if the full loan amount is insured several times over. In order to avoid this, it is recommendable to use a joint life cover or insert additional policy conditions stating that the requested loan amount should only be paid out once.
- Purpose of the loan cover
- Interest rate
- Other guarantees
- Insurance requested by bank / lender
Multiples can be used as a reference, but you can be more lenient for loan cover!
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