Whether you are an experienced business owner or are just embarking on your journey to start your business, you’ve likely invested a lot of your personal time and money. At some point, you may need to borrow funds.
And, sometimes along the journey, unforeseen life events, like personal health setbacks, may have a significant financial impact on your business and ability to maintain your payments on your business debts. Such events may be even more devastating if your business is your livelihood and your primary source of income that supports yourself and your family.
Quick Facts
Source: Insureon
Help to pay your business debts during difficult times
Business loan insurance is optional coverage to help a business during times of financial hardship if the business owner, or someone essential to the business, is unable to continue working as a result of an adverse life event, such as disability, certain illness or loss of life. In situations such as these, business loan insurance can help pay off the business outstanding balance, or maintain regular loan payments, allowing the business to carry on.
Business loan insurance is commonly available on:
- Credit lines
- Term loans
- Credit cards
The coverage options include Disability, Hospitalization, Terminal Illness and Loss of Life.
How benefits are typically paid depends on the coverage:
| Disability | Hospitalization |
Terminal Illness |
Loss of Life |
Continue to make monthly payments |
Pay down debt |
Pay off debt |
Pay off debt |
Who is eligible for coverage?
Sole proprietors, partners, guarantors, or shareholders who own at least 10% of the voting rights, or key employees.
Who is a key employee – do you have one?
Key employees are people whose contributions are essential to your business and without whom the business would have difficulty operating, and possibly surviving. These individuals can be insured as part of business loan insurance.
Should you consider business loan insurance?
Here are a few questions you may want to ask yourself
| Yes | No | |
|---|---|---|
| Do you have a plan in place to pay off your outstanding debts if you or a key employee in your business were to pass away, or would there be an immediate negative financial impact on the company and its day-to-day operations? | ||
| If you or a key member of your business had to stop working because of a sudden illness or disability, could you continue to meet your financial obligations – line of credit, loans or credit card payments? | ||
| Is your business the primary source of income to support you and your family? | ||
| If something were to happen to you, could your family maintain their standard of living and be financially secure moving forward? | ||
| Based on your type of business, are there inherent risks to you and/or your key employee(s)? |
What are the benefits of business loan insurance?
During times of financial hardship, business loan insurance can pay borrowing balances or make regular payments potentially freeing up other business income to:
- Continue running your business if cash flow is interrupted due to illness, disability or the passing of a key employee, so you don’t have to find alternate funding or take on additional debt
- Maintain ongoing debt payments if you or any key employees become disabled or ill, allowing the affected individual to focus on their recovery and not worry about meeting monthly payments
- Pay off outstanding debt balances, such as a line of credit, loan or credit card allowing you to free up capital which can be reinvested in the business
- Keep your business financially on track to assist in continuing to meet your personal needs and those of your family and your employees
What is Scotia Business Loan Protection?
Scotia Business Loan Protection is optional creditor insurance protection designed to help you with your business-related financial obligations if you or any other key employee is unable to work. It can cover the regular payments on your Scotiabank business line of credit, loan or credit card in the event of disability, and pay off outstanding loan balances in the case of death.
Who is eligible for coverage?
Eligible businesses include those:
- that reside and operate in Canada
- are a sole proprietorship, partnership, corporation holding company or other entity operating a small business (e.g., farm, fishery or ranch), and
- have a Scotiabank business loan, or line of credit or credit card
Scotia Business Loan Protection @ a glance
Scotia Business Loan Protection insurance coverage provides Disability, Hospitalization, Terminal Illness and Loss of Life benefits and is offered in two coverage bundle types, Basic and Comprehensive Protection.
Benefit |
Comprehensive Protection |
Basic Protection Available only when the debt being insured is greater than $50,000 |
Life |
√ Outstanding balance to a maximum of $2,000,000 per insured applicant |
√ Outstanding balance up to a maximum of $2,000,000 per insured applicant |
Terminal Illness |
√ Outstanding balance to a maximum of $2,000,000 |
|
Disability |
√ Up to $7,500 per month for a maximum of 24 months. |
|
Hospitalization |
√ Up to $15,000 paid in one lump-sum payment |
|
Scotia Business Loan Protection is a Group Policy underwritten by The Canada Life Assurance Company. All coverage is subject to the terms and conditions outlined in the Certificate of Insurance which you will receive upon enrollment.
All coverage is subject to the terms and conditions outlined in the Certificate of Insurance which you will receive upon enrollment.
No matter where you may be on your journey to build your business – just starting out, expanding or preparing to pass on the responsibility to someone else – a financial plan that includes business loan protection insurance may help safeguard your business if life takes an unexpected turn.
To learn more about Scotia Business Loan Protection visit Scotiabank.com/insurance or speak with a Scotiabank Small Business Advisor today. We can meet with you to find out about your business needs and help you understand the coverage options available.
