Purchasing business loan insurance when starting your dental practice may be an appropriate consideration. It may also be required by the lender.
Why Business Loan Insurance Could be an Appropriate Purchase
In addition to being a requirement according to some lenders, business loan insurance may be a good idea for other reasons as well. For example, business loan coverage may help prevent bankruptcy in the event that a covered occurrence happens that causes your business to struggle with debt repayment.
It may be appropriate for a business that has significant debt that would cripple the business if revenue stopped due to a covered event. Admittedly, though, many new businesses may fit that description.
How Much Is Business Loan Insurance Coverage?
Because there are so many variables between companies and different coverages, it’s difficult to provide an exact figure on what you can expect to pay for business loan insurance, without obtaining a quote from an insurance company. However, two of the primary factors that contribute to the cost of a policy will be outlined below.
Once you understand what goes into pricing these policies, you may be better able to estimate how much it might cost you individually.
Factors That Contribute to Business Loan Insurance Costs
Factor 1: The Applicant
Each business loan insurance applicant is individually evaluated by any loan insurance provider. This evaluation will include looking at factors like your lifestyle, age, health, etc. All this information will help the insurance company to determine their risk from insuring you.
In general, as you might expect, the healthier you are as an individual, and the better lifestyle choices you make, the lower cost your policy may be. Keep in mind, most insurance policies that involve payment in the event something happens to you physically, making you unable to work, will evaluate your current health to determine how likely you are to need to use your policy.
Factor 2: The Loan Amount
Another factor considered when pricing business loan insurance is the amount of the loan in question. Remember, the business loan insurance policy is intended to continue to pay your loan in the event you are unable to work due to disability or if you pass away. This means the policy may continue to pay even if you are unable to make any additional income.
You may have other insurance policies that cover your personal loss of income, such as life insurance or disability income insurance. A business loan insurance plan will pay your business lender, helping your family to handle the expense of your business loan in the event that something happens to you.
Consequently, the cost of a business loan insurance policy will be greatly affected by the amount of the loan it is covering. The larger the loan amount in question, generally higher the premium payment you can expect to pay each month. While you can’t alter how much you have already borrowed to get your dental practice off and running, if you haven’t already taken out a business loan and are in the process of researching all the costs involved, keep this in mind. The more money you borrow, the larger the insurance policy premium amount likely will be to cover that loan amount.
Ready to Discuss Business Loan Insurance?
While the above information doesn’t provide an exact dollar amount you can expect to pay for business loan insurance, it should give you some idea of what factors play into pricing such policies.
As with any insurance, a business loan protection policy is not something you want to have to use, because it would indicate that some event has occurred that affects your ability to pay back the business loan. However, life sometimes throws us all unexpected challenges, so it may be appropriate to have a business loan insurance policy in place should you ever need to use it.
When you begin exploring a business loan insurance policy for your dental practice, contact one of our licensed insurance professionals today to get a quote for an appropriate business loan insurance policy.
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Treloar & Heisel and Treloar & Heisel Property and Casualty are divisions of Treloar & Heisel, Inc.
Insurance products are offered through Treloar & Heisel, Inc.
This content is intended for general informational purposes only and should not be construed as advice. Please consult a licensed insurance professional concerning these topics. Please review your policy for the binding contract terms.