The Importance of Business Loan Protection Insurance in the UAE

Why you need Business Loan Protection Insurance in the UAE

Introduction

A flourishing business can allow for great profit margins, brand reputation and growth. However, in the initial stages, funds are often difficult. Most businesses require additional funding to meet their expenses at the start-up stage. Additionally, even an established business may require external funds to diversify or grow their portfolio.

Most of these funds are acquired in the form of debt such as loans from the banks. However, with market fluctuations and the volatile nature of the market, securing a loan is not always easy. Even though a business may be sound on paper, when it comes to offering a loan, the banks often look at the key people running the business – the true asset of any firm.

Need for business loan protection insurance

There are numerous evaluation criteria’s that a bank or firm may consider before dispensing a loan. In most cases, the loan is secured against a key person in the business. This may be a Director or CEO of the firm, a software expert possessing excellent skills or any other person considered to be of key importance to the functioning of the firm.

However, if the key person against whom the loan has been secured falls severely ill or passes away, the bank may look to protect its assets by recalling the loan. This can be extremely damaging for a business and can even cause the business operations to be put on halt.

To avoid this situation and protect your business against such recalling of a loan, many businesses opt for business loan protection insurance in the UAE. This form of insurance ensures a payout amount in case of such an adversity that can be used to repay the debt or support business functions as the case may be.

Without such an insurance, the loan may need to be repaid by a Director or senior member, estate of the deceased, or the business itself. In most cases, businesses rarely have such huge amounts easily dispensable. Having to pay back a loan suddenly in the UAE can become a massive problem for everyone involved and can even place the future of the business at massive financial risk.

Conclusion

While there are several policies available for Business Loan Protection Insurance, not all of them may be a match for you. There are numerous factors that need to be accounted for beforehand such as the cover to be opted for, the loan repayment plan etc. In addition, a certified financial planner in Dubai will be able to guide in the right direction keeping I mind the laws in the UAE. their due, a valid Will is crucial.


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To secure the right protection for your business and ensure your business has the stability to continue against any adverse situation, please connect with Dr Rafiya Mushtaq, a reliable Independent Financial Advisor in UAE