How Life Insurance Can Protect Your Small Business

As a small business owner, you’ve worked very hard to build your business, and you want to make sure that you can keep it going for a long time, even after you are gone. You might be wondering what will happen to your business after you pass away, and how your loss will affect your family and employees. In most cases, a business will either go out of business or will be taken over by a partner when the owner passes, but in the worst-case scenario, your family could have to take on the debt carried by your business. If you don’t want any of these things to happen, life insurance is a great way to not only protect your small business but your family, as well.

What Might Happen to Your Small Business

Oftentimes business owners think that their spouse or other family members will take over the business when they are gone, but that’s very unlikely to happen. When you pass away, your family might not want to take over the company, or might not be capable of running it.hand giving another hand a key

If a family member isn’t the right option, you might want to rely on a key employee to take over the business. But they might require a salary commensurate with the added demands of the job, and the funds that will be needed to keep everything going might be more than the business can handle.

In addition, there is the possibility that a competitor will try to take over your business, take away customers, or purchase equipment and inventory cheaply from your business.

Life Insurance Options For Your Business

All of the above instances will not end in a positive way for your family or business. This is why life insurance is a very important way to protect your assets and your family. You can consider:

  1. Key person insurance – With this policy, when a key person like yourself dies, the insurance can help make up for lost sales or earnings and cover the cost of finding and training a replacement.
  2. Buy-sell agreement funded with life insurance – This allows remaining business owners to buy the company interests of the deceased owner at a previously agreed-upon price. This will ensure that your surviving family members will be fairly and properly compensated for their share of the business.
  3. Individual life insurance – You can also purchase a life insurance policy individually to provide your family with additional money to pay off any personal debts, and help with living expenses and future needs.

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    There are many great affordable life insurance options to choose from, which is why comparing plans is important.

Need Help?

Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. There are many great affordable life insurance options to choose from that will provide enough money for your family, for a low monthly price. The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

 

Key Person Insurance & Your Business

Running a company is not easy: not only are you busy with setting up your business, hiring the right people, and staying on top of your bills, you also have to worry about insuring your business so that you’re protected against property damage and lawsuits. But have you thought about insuring your most valuable asset, your key employee/s? There is a way that you can financially protect your business against the loss of a partner or other key employees and the damage this loss can do to the business you worked so hard to build: purchasing a key person insurance policy. 

What Is Key Person Insurance?

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Key person life insurance can help cover costs of hiring and training a new person to replace the key person of a business.

Key person insurance is a life insurance policy that a business can take out on the life of an owner, executive, co-founder, business partner, or any other individual that is considered critical to the business, and whose death would hurt the company financially. Unlike with personal life and disability insurance, with key person insurance, a business entity buys the policy, is the beneficiary of the policy, and pays the premiums. The policy will help with any losses that stem from the death of your key employee, including protecting your company from profit loss, guaranteeing your business loans, and protecting your shareholders. 

In the event of the passing of the key person, your business will receive the insurance payout, which can be used to:

  • Cover the cost of hiring and training a replacement for the key person 
  • Offset day-to-day operating expenses
  • Supplement lost revenues until a replacement can be hired

In the instance that your company can no longer operate after the key person passes, the money can be used to:

  • Pay off any debts
  • Provide severance to employees
  • Distribute money to investors

Essentially, this type of life insurance will give your business options other than bankruptcy in the face of the loss of a key employee.

Which Businesses Should Consider Key Person Insurance?

This type of life insurance policy can be especially beneficial for small businesses or startups that have a small team, and are most often used to insure the owner or founder of the small business. But this doesn’t mean that this type of insurance isn’t also useful for larger scale businesses: every business has at least one key employee whose death would cause financial distress to the company.

How Much Does Key Person Insurance Cost?

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The price of key person insurance varies on multiple factors, which is why it is best to compare plans with an agent.

The price of a key person insurance policy varies depending on multiple factors, including how large of a policy you would like to take out: you can request policies that pay out as little as $100,000 or as much as $1 million. Other factors that insurance companies take into consideration include the insured person’s age and overall health, as well as which type of insurance policy you decide to take out; for example, as with other types of life insurance, you can opt for either a permanent life insurance policy or a term life insurance policy, which is significantly cheaper. In order to find the right plan, you will have to compare different policies from different insurance companies, because they all offer different levels of coverage at different prices.

The best way to find the right key person life insurance policy for your business is by working with an agent who specializes in key person life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder for your business by a financial burden, check key person life insurance rates today.