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Friday, October 25, 2013

Identify Clients for Business Loan Protection

By Anthony DeGregorio, Zenith Marketing

As a financial institution, you strive to provide the best mix of services and products to address all of your client’s lifetime needs – savings, checking, loan services, mortgage services, investment services, etc. Some institutions even go as far as to provide life insurance and other insurance-related products. In the course of business every day, we assess the financial risks when loaning money to our customers. As a lender, your institution may or may not require that a borrower’s loan is protected in the event of their death – usually with a life insurance policy.

However, death is not the only risk that needs to be accounted for when qualifying borrowers – have you considered what would happen if your borrower became disabled and unable to work (and unable to maintain payments on a loan)? After all, an individual is 240 times more likely to suffer a disabling injury than suffer a fatal one!

Have you considered suggesting a Business Loan Protection Rider to your clients? In the event of your client suffering a disability, the insurance company will reimburse the business owner for the covered loan obligation – effectively negating the risk to your financial institution. In addition, Business Loan Protection riders can improve a client’s chances of qualifying for a loan – it demonstrates a client’s due diligence in regards to the loan, by showing that there is a contingency plan in place. The client can even elect to assign the benefits to the institution holding the loan, so the insurance can pay directly to your bank in the event of a disability!

The ideal clients for this concept are owners of small/medium businesses that take loans out for business-related expenses, such as:
  • Purchasing/expansion of an existing business
  • Purchasing expensive equipment
  • Facility renovations/improvements/land purchases
  • Increases in capital/inventory growth

Contact Tony DeGregorio, Zenith Marketing Group’s Senior VP of Life Brokerage Sales, for more information on how you can implement this concept in your institution today!