When business owners apply for a loan from a bank, oftentimes the bank wants the debt insured in the event the loan payer becomes sick or injured.

There is a specific type of disability insurance policy designed to cover these business loans.

For example, suppose a dentist is in the process of purchasing a practice for $500,000. The bank requires the dentist to insure the loan for the next 10 years. At the time of claim, the policy will pay the balance of the loan. If the dentist becomes disabled in the first year, the policy would pay the remainder of the 10 years. If the dentist becomes disabled in the fifth year, the policy would pay the remaining five years of the loan.

The advantage of a disability business loan product versus an individual disability product is that the business loan product is significantly less expensive. Furthermore, the premium can be deducted as a business expense, since the benefits payable are paying down a deductible loan.

Jamie K. Fleischner is president of Set for Life Insurance, an independent disability insurance brokerage specializing in helping physicians, dentists and professionals. For more information about disability insurance to cover business loans, contact the Set for Life Insurance office at www.setforlifeinsurance.com