10 Ways Term Life Insurance can Help your Small Business
Owning a small business means dealing with different kinds of insurance. One of the most important of which is a term life insurance policy. In fact many financial experts state that a life insurance policy is just as important as business liability insurance. Here are ten reasons why you should have a term life insurance policy as a small business owner.
Tie Up All the Loose Ends
It can be pretty tricky to figure out the right amount of term life insurance that you need as a small business owner, much more complicated than if you were an employee. For one, if you pass away as an employee then the arrangement will leave with you and there usually aren’t many complications that could compromise the security of your loved ones in this case. On the other hand, owning a small business usually means that there are business engagements that are involved, which won’t necessarily end if you pass away. Luckily, these arrangements can be covered by a term life insurance policy.
Term life insurance tends to be less expensive than its whole term counterpart. This means that you can more easily afford to maintain a payment schedule for a term life insurance policy if your business hits rocky times. Term life insurance is especially great for those small business owners who are young, as the need for a life insurance policy is greatest at this time, but the ability to pay may be limited.
Term life insurance offers small business owners flexibility, which they wouldn’t have with a permanent policy. This means that if your situation were to ever change, and you find yourself needing less insurance than it won’t be as difficult to change.
Greatest Bang For Your Buck
By utilizing a term life insurance policy you’ll be able to receive the biggest bang for your buck when it comes to the amount of coverage you’ll receive for the premium that you pay. This will allow your family to afford to keep their lifestyle if you pass away.
Cover Business Liabilities
Whether a partner or a family member will inherit your small business if you pass away, you can make use of a term life insurance policy in order to ensure that your business will remain open and running even if you aren’t there to oversee it. You are able to set up term life insurance policies that will pay off business debts once you pass away. You can even set a certain amount of money that ‘s made available in order to take care of the transition in the case of your death. The best part is you will be able to maintain these term life insurance policies for as long as you need to. Although your business will likely be affected by your demise, using a term life insurance policy will soften the blow immensely and will strengthen your business’s financial position, as well as help your partners or family members to keep your business running smoothly in your absence.
Buy a Partner’s Equity Stake
If you are partners in a small business then it is in your best interest to have a term life insurance policy in the case that your partner passes away. This is because you can then be the owner of the term policy and collect in the case that your partner passes away. This is not unlike owning a life insurance policy on your life and in the case of your death, however instead the proceeds will allow you to continue running your small business without your partner.
Option of Term Riders
With a term life insurance policy you can add on term riders, or term policies in order to cover any specific financial needs that you may have. For instance, you can utilize a mortgage life insurance policy in order to pay off your house’s mortgage if you pass away prematurely. This will help to lower your family members’ monthly living costs and make sure that your death benefit goes as far as it can when it comes to taking care of your family. You may also use a term life insurance policy in order to protect against specific business needs.
Life Insurance Policies on Employers
As the owner of a small business you can also take a life insurance policy out on employees that are key to running your business. This usually is referred to as key man life insurance, and is taken out because the passing away of an important employee can negatively impact a business. Taking out term life insurance policies on important employees allows you to have an insurable interest. For example, a small business that hires a salesman who brings in a large portion of the business’s revenue should be insured in order to avoid any potential harm to the company if he passes away.
A term life insurance policy isn’t just for your small business; it is for personal coverage as well. However, a term life insurance policy can also be specific to your business needs, which makes it a perfect combination for your situation.
Protect Your Family
Like any person that has others who depend on them financially, someone who owns a small business requires life insurance coverage in order to ensure that their family survives a loss of income in the case that they pass away.
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