originally posted 2/17, updated 3/19
The best advice is to put business life insurance in place once you start business. But we all, both in our personal lives and businesses, wish we had the luxury of plenty of time to get done what we need to get done. I know in my life it sure doesn’t seem to work out like that as often as, well, as often as I deserve it to. Just when we get into a groove and have the day to day tasks cubby-holed and handled, something new and usually urgent gets thrown on our plate and things get challenging.
3 Reasons to Put Business Life Insurance in Place Now
Collateral for a Business Loan. Losing track of time happens on a frequent basis in business life insurance. In a perfect business, which very few of us run, the CEO or key man or partner would have life insurance in place for whatever business need comes up. Last minute business life insurance ends up being needed as collateral for a business loan. The SBA always requires life insurance on the owner or CEO and most banks do also, but their requirements may not be as strict. This is where the challenge hits the fan for the unprepared.
Tight Timelines. For those business people who don’t have business life insurance in place, there is often a disconnect between how long it will take, or whether they will be approved or declined in the process. And when a closing date is set, being wrong about how long it will take to get life insurance can upset the apple cart, forcing companies to pay for last minute business life insurance, or risk a delay.
If you’ve been told that it takes a month to get life insurance (best case with most companies) and you start an application 5 or 6 weeks prior to closing, you are about to find out what kind of havoc Murphy’s law can wreak. Perfect scenario you would have the application signed and an exam completed in one week. The company would order medical records and they would have those in two weeks.
This gives the life insurance company one week to compile, underwrite, approve and send the policy to put in force. More likely would be two weeks for the app and exam, a month to acquire records and two weeks to underwrite, send the policy and get it put in force. If that happens you will have to move your business loan closing date and that could mean delayed plans, a change in interest rate, or in some cases starting over if you lose an attractive part of the financing package.
Decline due to Health Concerns. There is always the possibility of the company declining to offer life insurance for any number of reasons. In business language you are up a creek without a paddle…..unless you call us and we get last minute business life insurance in force that meets the SBA and bank guidelines.
In 5 working days, we can bail you out even if your other life insurance company has declined you. We can even get you life insurance for business purposes in 5 days even if you are HIV positive, just out of alcohol or drug rehab, or are being treated for cancer.
You are far better off putting business life insurance in force when you first start the business, but all is not lost if you put things off like the majority of us and require last minute business life insurance. If you have questions or are up against a loan closing date deadline, call or email me directly. My name is Ed Hinerman. Let’s talk.