Whether you are a sole proprietor or have partners, the majority of lenders or investors require that you have a business loan life insurance policy in place before they approve your loan. This is commonly called collateral assignment of life insurance.
Many people overlook the requirement for collateral assignment of life insurance until the last minute. Which then leaves you scrambling to find a policy. So there may be occasions when you need approval for a life insurance policy within a matter of days in order to get the loan.
Another common problem is most traditional life insurance companies will decline business owners in the marijuana industry. The primary reason is the conflict between state and federal laws. Many insurance companies don’t want to pick a side so they stay out of the discussion completely.
The whole industry puts up red flags for life insurance companies causing countless headaches when it comes to finding a business loan life insurance policy.
There are in fact only a handful of life insurers which may approve a marijuana business loan life insurance policy.
At Marcan Insurance, we understand the need for finding fast approval on a policy to qualify for a business loan. Because we are an independent life insurance agency, we have access to multiple companies which specialize in insuring business loans quickly. Call us right now at (888) 987-8447 because this is our specialty!
Reasons to Buy Life Insurance for Business Loans
There are several vital reasons why you need marijuana business owner life insurance for loan.
Many marijuana business owners will likely require a business loan to:
- Expand their business
- Buy new equipment or upgrade
- Expand into a new marketplace
- Acquire a competitive business
- Join forces with a cannabis business
As a business owner, you also want to ensure you have a life insurance policy which covers any business loans.
Why? Consider some of the following problems.
1. Premature Death
You or the partner who obtained the loan could die prematurely. If your company doesn’t have a life insurance policy to cover the loan, then the lender or investor often calls for the repayment of the outstanding loan amount immediately.
2. Leaves the Company Financially Vulnerable
The company could suffer financially since many have to sell valuable assets to cover the loan. This could impact suppliers, customers, or other investors. The result could even lead to the failure of the business such as having to declare bankruptcy.
3. Exposes the Family Survivors
If you have already spent the loan money, your business may not be able to repay what is owed. The lender or investor may start to go after surviving family members for reimbursement.
Tips for Finding a Good Policy as a Marijuana Business Owner for Collateral Assignment of Life Insurance
To avoid delays in getting your marijuana business loan approved in a timely manner, here are a few life insurance tips to help make the process painless.
1. Always Use an Independent Life Insurance Agent
Every life insurer has their unique underwriting requirements. Independent life insurance agents such as the ones here at Marcan Insurance know and understand the underwriting criteria of every insurer. Independent agents can find insurers which are marijuana friendly and which companies don’t require a medical exam. And, they can also find you the policies at lowest price and will save you both time and money.
2. Don’t Wait to Find a Policy with Collateral Assignment of Life Insurance
Don’t leave the application process to the last minute. Make the application process one of the very first steps instead. Some life insurers may require that you undergo a medical examination which can be a lengthy process.
What happens if you are declined for a policy because of health issues? You won’t be approved for a policy and your loan application could be declined.
3. Avoid Loan Protection Policies Offered By Lenders
When you apply for a loan, many lenders will offer the availability of loan protection indemnification policies through their lending institution. First, policies offered by these lenders will have themselves named as the sole beneficiary which is unwise. (See Tip #4.) Second, these policies can be significantly more expensive than ones you can get through an independent agent.
4. Use a Collateral Assignment for Beneficiaries
If you can avoid it, do not ever name the lender as beneficiary.
Here’s an example of why this is a terrible idea. (Although the lender makes a tidy profit.)
Suppose you borrow $1 million dollars and have the loan life insured with the lender named as beneficiary. Four years pass and then you unexpectedly die having paid the loan down by $500,000.
Then what happens?
The lender will receive the full $1 million of the life insurance proceeds. Meaning the lender will end up profiting by the $500,000 of the loan you have re-paid plus interest.
A much better approach is to use a collateral assignment of life insurance where you name a business partner or family member as the beneficiary. By employing a collateral assignment arrangement, you will ensure the lender will be fully reimbursed for any loan amount outstanding while the balance of the policy proceeds goes to the beneficiary.
In the case cited above, the lender would receive the outstanding owed balance of $500,000 and the beneficiary would also receive $500,000 of the life insurance proceeds.
Feature Product for Marijuana Business Owners
Lloyd’s of London is one of the most accepting life insurance companies for business owners within the cannabis industry. To satisfy business loan requirements they offer a policy with collateral assignment of life insurance pretty much regardless of what industry you work in. The best part? You don’t need to take a medical exam.
They can also approve and issue the policy within 24 – 48 hours from the time of application.
Some of the policy benefits Lloyd’s offers for business loan life insurance include:
- Term of insurance is from 90 days to 12 months
- Renewals are considered if extended coverage is needed
This term life insurance would be perfect to cover the following marijuana business owner life insurance requirements:
- Business Bank Loans
- Business Loan Indemnification
- Buy/Sell Agreement Funding
- Key Person Coverage
- Confidential Coverage
- Venture Capital Investments
- Mergers and Acquisitions
- Short Term Coverage
This unique business loan life insurance policy has the added benefit of offering a simple application format as well as super fast underwriting. All you need in addition to the application is to meet the following criteria
- A copy of the loan agreement is required
- Benefit amount will not exceed the balance of the loan
This form of coverage will extremely beneficial for those in the following situations:
- Coverage is required immediately (24-48 hours)
- Insurable interests are required to remain confidential
- Completing a medical exam is a problem
- Health may make you normally uninsurable
- Coverage is required for a short period of time
- Issues limits are a problem (you need a huge benefit amount)
- Insured is temporarily out of the country
- Insured travels to war zones
All you have to do is to truthfully answer 8 simple health questions and provide a copy of your loan agreement.
How Marcan Insurance Helps Marijuana Business Owners
Marcan Insurance specializes with helping marijuana business industry owners in finding any form of life insurance they need.
Finding approval for any form of life insurance, and especially for business loans, can be problematic for marijuana business owners. Marcan Insurance offers you an extra advantage because we know which life insurers are marijuana friendly.
We can provide life insurance coverage for any of the following situations including:
- Marijuana Business Owner Key Person Life Insurance
- Marijuana Business Owner Disability Insurance
- Marijuana Business Owner Buy Sell Life Insurance
- Marijuana Business Owner Life Insurance for Loan
- Low Cost Personal Term Life Insurance Policies
- Affordable Personal Permanent Life Insurance Solutions
Marcan Insurance is an independent life insurance agency. That means we work for you and not the life insurance companies. With access to over 70 top-rated life insurance companies, we can find the best marijuana-friendly company for your situation.
If you need help finding Marijuana Business Owner Life Insurance for Loan, or any other form of coverage, then call us right now at (888) 987-8447. We have found low priced policies for everyone from business owners to recreational smokers all across the country. We can find one for your situation too.