Back to Business Loan Insurance Plan

Below are answers to some of the most common questions asked about Business Loan Insurance Plan⁽¹⁾.

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Why should I insure my business loan?

Your business revenues may depend on the skills of one person (such as yourself) or a number of key employees. A key person passing away—or a partner becoming injured or disabled—could have a significant impact on your business earnings.

By helping to ensure that debts are settled, Business Loan Insurance Plan makes it easier for your business to get through a difficult transition period.

You may also want to consider Business Loan Insurance Plan for the following reasons:

• For owner-operators, Business Loan Insurance Plan helps pay off business debt, thereby preserving personal insurance to cover other needs such as income replacement, education funding, taxes and so forth.
• The death of an owner-operator can result in significant tax liabilities and a reduction in assets. Business Loan Insurance Plan helps minimize potential cash flow problems by helping to pay off business debts.
• For family-owned businesses, Business Loan Insurance Plan helps protect an important family asset.
• If you intend to leave the business to your children, Business Loan Insurance Plan helps free them of the burden of debt if you die.
• When business debt is secured with personal assets, Business Loan Insurance Plan helps pay off this debt so personal assets stay intact.

I have enough personal assets to cover business debt. Why do I need Business Loan Insurance Plan?

Consider what would happen if your family had to liquidate all or part of your nest egg suddenly and in a down market. Business Loan Insurance Plan ensures the covered business debt is paid off so your personal/family assets can remain intact and your savings and home equity can be used for what you intended them for—your loved ones.

I already have a lot of insurance; isn't that enough?

With the insurance you already have, can your family or partners continue to run the business, keep up monthly expenses on the home and/or business and make ends meet? Or would they be forced to sell the business and/or personal assets?

Anytime you add new debt, it is wise to review your coverage to ensure it still meets your current credit situation. Business Loan Insurance Plan helps pay off business debt, thereby preserving personal insurance to cover other needs.

What does the life insurance benefit provide?

Should an owner, guarantor or key employee pass away, the life insurance coverage provides up to $1,000,000—per insured person—to help pay off outstanding business loans you have insured under the plan.

Up to 25 owners, guarantors or key employees may apply for life insurance coverage.

What does the disability insurance benefit provide?

The disability insurance option of this plan is available in combination with life insurance, covering up to three business owners who have a minimum of $10,000 of life insurance coverage in place.

In the event of a disability, the disability benefit can cover a fixed or variable monthly loan payment or 1% of an operating line of credit’s qualifying balance per month so that the insured person can focus on recovery.

What is considered a disability?

You are considered disabled if you cannot work because of a bodily injury, disease, mental infirmity, sickness or complications due to pregnancy and any related medical conditions. You'll also need to be under the care of a licensed physician or health practitioner approved by the insurer and cannot engage in any occupation or employment.

What does the complimentary accidental dismemberment benefit provide?

A serious accident could affect the contribution you or a key person makes to your business. That's why we've included an accidental dismemberment benefit at no additional cost as part of the life insurance coverage.

If an insured person suffers an accidental dismemberment, a benefit of up to $50,000 will be paid to help reduce your loan.

What businesses are eligible for this insurance?

To qualify for and remain eligible for coverage, the business must:

• Be resident in Canada, and operate in Canada
• Be a sole proprietorship, partnership, corporation or other entity operating a business/farm that is indebted to RBC Royal Bank under a loan

What loans are eligible for this insurance?

The following RBC Royal Bank business loans are eligible for coverage (all loans must be denominated in Canadian dollars):

• Operating loans
• Term Loans
• Canada Small Business Financing Loan
• Royal Bricks & Mortar loans
• RoyFarm Mortgage^®
• Loans granted under the Farm Improvement and Marketing Co-Operative Loan Act

These types of loans are not eligible: letters of credit, letters of guarantee, most commercial mortgages, Visa^‡ card balances, overdrafts, leases, bankers' acceptances or tender loans.

Which individuals in my company may apply for life insurance coverage?

Up to 25 owners, guarantors or key employees may apply for the plan's life coverage. To qualify and remain eligible for coverage, the individual for whom insurance is requested (the proposed insured) must be:

• 18-64 years of age on the date the insurance begins (coverage can be continued until the last day of the month in which he or she turns age 70), and
• A Canadian resident, and
• An owner of the business, or
• Responsible in whole or in part for the management of the business, or
• A guarantor or endorser of the insured loan

Which individuals in my company may apply for disability insurance coverage?

Up to three business owners may apply for the plan's disability coverage. To qualify and remain eligible for coverage, the individual for whom insurance is requested (the proposed insured) must be:

• 18-64 years of age, and
• A Canadian resident, and
• Approved for and maintain a minimum of $10,000 in life insurance coverage under the plan, and
• An owner of the business, and
• Actively working for the business at least 20 hours a week, on average, as of the date of the application

Can I apply for life insurance coverage in excess of my outstanding authorized credit amount?

Yes. You can apply for life insurance coverage greater than your outstanding authorized credit amount, up to $300,000, in anticipation of further business borrowing. By doing this, you can avoid having to re-apply and re-qualify in the future. And since premiums are charged based on your outstanding insured balance, you only pay for the coverage you need.

How will coverage be allocated?

As your outstanding balances decline, any available coverage is automatically used to insure your other eligible business loans.

Will I pay a lower premium as my loan balance decreases?

Yes. Business Loan Insurance Plan automatically tracks your term loan or operating line, and bases your premiums on your average daily balance. As a result, you pay only for as much or as little as you need. And, you pay nothing when the average outstanding balance of your loan or operating line is zero.

How is the life insurance premium calculated?

The life insurance premium includes the life insurance benefit and the accidental dismemberment benefit and is due and payable with the scheduled loan interest payment. Premiums are based on the insured person's current age, sex, smoking status and the daily outstanding balance of all insured loans.

The chart below shows the monthly premiums for each $1,000 of life insurance (plus any applicable provincial sales tax):

Date	Male		Female
	Smoker	Non-smoker	Smoker	Non-smoker
18 - 29	0.14	0.10	0.10	0.09
30 - 32	0.15	0.11	0.12	0.10
33 - 35	0.17	0.12	0.13	0.11
36 - 38	0.20	0.14	0.16	0.12
39 - 40	0.25	0.16	0.19	0.13
41 - 42	0.29	0.19	0.22	0.15
43 - 44	0.34	0.22	0.25	0.17
45 - 46	0.39	0.27	0.28	0.20
47 - 48	0.45	0.32	0.32	0.23
49 - 50	0.56	0.37	0.36	0.27
51 - 52	0.66	0.42	0.42	0.31
53 - 54	0.76	0.48	0.48	0.35
55	0.85	0.52	0.54	0.38
56	0.93	0.57	0.61	0.41
57	1.00	0.62	0.66	0.45
58	1.07	0.68	0.72	0.49
59	1.14	0.75	0.78	0.53
60	1.22	0.83	0.84	0.58
61	1.34	0.93	0.90	0.62
62	1.48	1.03	0.96	0.67
63	1.63	1.13	1.02	0.74
64	1.81	1.24	1.08	0.82
65	2.00	1.34	1.14	0.91
66	2.19	1.47	1.20	1.01
67	2.38	1.62	1.30	1.10
68	2.60	1.78	1.44	1.18
69	2.48	1.94	1.60	1.28

Example: For an insured person who is a 35-year-old female non-smoker, monthly premiums for an insured loan of $50,000 would be $5.50, plus tax if applicable ($50,000 / 1,000 x 0.11 = $5.50)

Are there any health questions?

Each person applying for coverage must answer at least one basic health question in the application. If you are applying for disability coverage, you will also need to answer a second basic health question. If you answer "yes" to either of the two questions in the application, you will need to schedule a medical phone interview.

A medical phone interview is also required if you are applying for life insurance coverage in excess of $300,000.

Click here for details on the medical phone interview.

How can I get more information or apply?

For more information or to apply for Business Loan Insurance Plan, contact your Small Business Advisor or RBC Royal Bank Account Manager directly. Or call 1-800-769-2523 to speak with a representative at the Insurance Service Centre.

1) As with any insurance coverage, exclusions and limitations do exist. Please refer to the Terms and Conditions, or talk to your RBC Account Manager for more information.