Term Life Insurance
What does it mean
Term Life Insurance is an agreement between an insurance company and an individual where the life insurance company agrees to compensate an individuals beneficiaries in the event of the death of the individual during an agreed upon length of time (term).
Why does it matter
Life Insurance matters to a banker because in many cases the bank is borrowing money to a small business, and that small business is primarily operated by one or a few individuals. These individual(s) are essential to the operations of the business, and if these individuals were to die, the business would suffer.
What life insurance can accomplish is to provide the bank with one of two things: alternative source of repayment or liquidity to buffer a transition. If the life insurance policy is assigned to the bank, and it is sufficiently large enough to repay the loan, then if that primary individual were to die, the loans get fully repaid. This is good for both the bank and the borrower, because the bank gets its loans repaid when it may otherwise be difficult if that key person were to die, and it is also good for the business because they have additional operating flexibility due to lower loan payments when they learn how to operate without their leader. If the life insurance is not assigned to the bank, the life insurance can provide a source of additional liquidity in the business to buffer itself against operational issues that may come up soon after their leaders death.
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Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
