Don’t Forget about Life Insurance
In addition to disability coverage, life insurance is also required to cover a practice loan. If you already have a life insurance policy, you could use a portion of the benefits to assign to the bank, but again, this policy serves a different purpose. The existing life insurance policy was intended to take care of your family, not the banker.
As with the disability policy, we’d suggest you look for a separate term life policy (10 or 15yr), and assign these new benefits to the bank. But you’re in luck! Term life insurance is inexpensive, and for a small additional premium, you’ll be covered by additional hundreds of thousands, should your family be in need.
After the new policies are put in place, you’ll want to let your insurance advisor know if you refinance with another bank, so the policies can be changed to reflect the new bank.
And remember, you’ll need both disability and life insurance to close on a practice loan, and it’s smart to start with a fresh policy for each.