Owning a business involves years of hard work and dedication. Business owners work persistently to increase revenue and nurture the reputation of their brands. Whether you own a boutique, a coffee shop, or a law firm, your business is a part of who you are. Without life insurance, all the labor you put in may go to waste if something happens to you.
Just as an uninsured parent leaving his or her family with nothing will provide great hardship for his or her dependents, an uninsured business owner will create a domino effect. The company itself, your employees and any dependents relying on the business as a primary income will suffer if you don’t invest in life insurance. Some business owners think life insurance is unnecessary or too expensive to invest in for their small businesses. Others understand the gravity it would have on their businesses if they were to pass away without a plan in action.
How exactly does life insurance affect business owners? What policies should you invest in to keep your family, employees, and company afloat?
Personal Life Insurance
If you are the breadwinner of the family, a personal life insurance policy would save your dependents a significant amount of money and stress. Not only would this payout cover your funeral expenses, it would help them pay off any loans and debt the business faces while allowing them to live with comfort financially.
If your company has multiple owners or partners, combining life insurance policies with a buy-sell agreement on each partner could save your business. This concept allows partners to buy out the share that belongs to the family of the deceased. The best part? This life insurance policy covers the price for this buyout. A lot of companies also use this legal agreement if a co-partner leaves the business. Think of this as the pre-nuptial agreement of the business world.
Key Person Life Insurance
If your business relies heavily on your expertise, you might want to look into key person life insurance. This policy provides money to the person or people that will be taking over ownership of the business, whether it’s the family or other partners. The reason for this form of life insurance is to compensate the business for any financial losses that occur as a result of the death of a principal revenue generator. It keeps the business up and running even if the brains of the operation is no longer in the picture. The amount compensated is a fixed total that is specified in the insurance policy; it’s a pretty transparent deal.
Life Insurance as an Employee Benefit
Some insurance companies – such as State Farm – offer group life insurance to small business owners. In this competitive market, you’ll want to attract the highest quality talent. Smart businesses understand that the best way to gain and retain employees is with a stellar benefits package. As millennials are taking over the workforce, benefits and a work life balance are increasingly enticing potential employees; in recent years, these perks are almost as important to young workers as their compensation package.
Whether you’re interested in protecting your assets, supporting your family or attracting top-of-the-line employees, investing in life insurance will profit you and your business. The expenses may seem like a tough hurdle to get over, but they are necessary in preserving the wellbeing of your company. To combat this high spending, shop around for the best life insurance rates to make sure you’re getting the best deal.