My loan is on hold and I might lose the practice I am trying to buy!

This call was from a banker and the dentist, who were conferencing me together. This doctor had found her dream practice and they were scheduled to close in 10 days. She had overlooked the letter from the bank’s underwriter requiring her to have life and disability insurance in place as a closing contingency. We (banker, doctor, and insurance broker) were in trouble, as medically underwritten policies like disability can take 4-6 weeks to underwrite and issue. Fortunately, I was able to write the bank a letter saying I was working on this and would assign it as soon as it issued, and they were able to fund and close on time. Most banks require life and disability insurance on their loans, and EVERY doctor should have these policies in place regardless. The banks want to ensure that they are going to get repaid if you are to become disabled or pass away prematurely while still paying them back on the loan. The disability they have to get in order to get the loan is not personal coverage but business coverage, which only pays the bank if they become disabled. These policies are usually called Business Overhead Expense, or some comparable name, depending on the carrier. Banks are not in the business of losing money, and they will withhold funding until these two policies are in place. Believe it or not, your family has the same vested interest in your well-being as the bank does. Even if you have paid your practice loan off, your ability to work and provide for your family should also be protected by life and disability insurance!

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