Running Your Own Business
Did you know that life insurance is one of the most important types of insurance coverage that a business owner can have? If one of your primary concerns as an owner is extending the life of your business, then this is especially true. Consider what would happen if something catastrophic were to occur? How would your business survive without your expertise?
While this seems unlikely, life is anything but certain. As a business owner, you are responsible for the wellbeing of your loved ones and the longevity of your business. After putting in countless hours and work over the years, it only makes sense to secure your investment. Your business is also likely your family’s source of financial support. You’ll want to protect their financial future.
If you’re not sure whether life insurance is applicable to you or your business, here are some questions to consider:
- Is your business prepared to continue regular functions if you were to suddenly pass?
- Is your business financially sound and secure, especially in your absence?
- Would your business be able to recover from the loss of a key employee or partner?
While we often like to avoid thinking of uncomfortable questions such as these, it is better to be prepared than caught off-guard. As a business owner, you must be able to foresee possibilities that can affect or change your company. You need to be agile and resilient in the face of these changes. This is absolutely necessary for thriving companies.
Insurance for Business Owners
There are three main options to consider when deciding on life insurance. These are Individual Coverage, Buy-Sell Agreement, and Key Person Insurance. Learn more about each below.
Individual coverage is designed to protect your family from financial hardships in the wake of your passing. It is common for business owners to take out personal loans to help fuel their business. If you were to pass, these loans would then become the responsibility of your family. While you may assume that your family could simply sell or liquidate the business to pay off these debts, this is rarely an effective solution. Markets are unpredictable and volatile, so there is no telling what your business will be worth at the time of sale. Not to mention this is an unnecessary stress to put on your loved ones while mourning. Individual life insurance can provide your family the funds to help cover expenses, such as transferable debts and ongoing living expenses.
This is a popular life insurance coverage choice for business owners, especially when first starting a company or entering a new partnership. Essentially, a buy-sell agreement is a contract so that a deceased owner’s share of the business can be purchased at a predetermined price through a life insurance policy. Contracts are funded by the life insurance policies of each of the owners. Buy-sell agreements are useful for business owners as they can protect fellow owners as well as your family. Offering financial protection in the wake of your passing or another owner’s passing, buy-sell agreements ensure the longevity of your business, even if key figureheads are lost.
Key Person Insurance
Do you have an employee that is a key asset to your business’s success? If so, key person insurance should be part of your business plan. To put it simply, key person insurance is life insurance purchased by a business on a key employee and provides your business coverage in the event of their passing. This type of life insurance can help protect your business from a financial blow or difficult transition if this tragedy were to occur. It helps offset expenses such as lost earnings, sales, and the cost of hiring a replacement for the position. Investing in key person insurance is a wise move for owners who want to protect the interests and assets of their business. As a business owner, you do not want to be open to such vulnerabilities.
If you are unsure of the type of insurance that would best protect the longevity of your business and your family’s financial security, contact a professional to discuss options. You can obtain personalized rates without entering personal information. Simply enter your zip code to get started. You’ll quickly be on your way to securing your business.