Loan Indemnification Disability

Lenders will often require a borrower to collateralize a business loan with disability insurance. Lenders and insurance companies will allow the borrower to assign a portion of their individual disability insurance to cover the loan requirements. Simply put, the death of the business owner, who is responsible for the loan, puts the lender in a difficult position.  Banks don’t want to have estate sales of your equipment to recoup their costs; they just want their money.