Operating a small business is challenging and rewarding. People work hard to create an enterprise that pays their bills and employs others. Each member of the team is essential to support the daily company operations. If someone becomes seriously ill or dies, it impacts the business. Discover crucial reasons to invest in small business life insurance in this post.
One of the key reasons to get small business life insurance is to protect your business and your family when you die. Often family members are unable to take over a small business. You may have specific expertise as the owner that nobody else possesses. Plus, business loans may use your vehicles or home as collateral. This situation would put your family in a precarious financial position. Life insurance helps cover these expenses when you are gone. It also provides the business with needed colateral so that is can be fairly valued and, id desired, sold at a fair price.
Many business owners say nobody else can do what they can. And this is frequently true. When the owner dies, the business might have little or no value. Without the knowledge or talents of its proprietor, the company may close its doors. As a result, everyone experiences a loss. Business life insurance helps ease this financial blow.
But in many cases there is some intrinsic value in the business that can be unlocked. Life insurance planning can, if nothing else, buy time so that business partners or other who might be interested can negotiate a takeover. Too often, small businesses simply dissipate when the owner passes and with it the intellectual property, book of business, clientele and website that might have otherwise provided for those left behind.
Some small businesses focus on the time and talents of one individual. Others have a small team of professionals who get the work done. If one of them dies, the business will likely suffer. When this person is gone, nobody is instantly available to take over his or her areas of expertise. The right business life insurance policy gives your company time to find a suitable replacement or make other arrangements.
To account for this loss, many businesses purchase what’s called a key person or buy/sell life insurance agreement. These plans will instantly capitalize one or more key players so that the business and its practices can carry on without significant disruption. The proceeds from a buy/sell or key person agreement can be used in a number of ways in order to keep the business thriving. It will also help retain key client who might otherwise be tempted to move to a competitor.
It might take a combination of policies to save your business if you or another vital team member dies. A knowledgeable life insurance agent helps business owners find the ideal policies for their unique needs. For example, a personal life insurance policy will protect family members and help them pay off all types of debts. And a key person insurance policy protects proprietors and employees against business losses.
Each situation is different and requires strategic planning and careful valuations. Done right, your business will carry-on and the heirs of the deceased will be comfortable provided for. When a business must be sold in order to pay the heirs of an estate, the only person who usually wins is the buyer as they have significant leverage over the sellers.
While the need for small business life insurance might be evident, you may overlook it to handle other expenses. Nobody plans to die or get a debilitating illness. However, it happens, and you want to be prepared. Planning ensures the coverage is available when people need it. If something occurs, it would be too late to get coverage after the fact.
Whether it’s a life policy or one that provides income in case of a disability, insurance is one of the very best tax-advantaged tools to cover the unexpected.
Life insurance is a smart way to protect your wealth for the future. After a lifetime of building your business, you want to take care of your loved ones and employees. Investing in life insurance protects your current wealth for future generations and business owners. Instead of everything closing down, you can leave a thriving business behind to keep your loved ones comfortable for years to come.
Before a crisis occurs, start comparing life insurance policies today. Do you want to make sure your family can live in comfort after you die? Are you concerned about your business partners and employees carrying on with business operations as usual? Make a list of what you want to cover and share it with your dedicated insurance agent. No matter what the coverage, there are policies to help you achieve your goals. And your broker will comparison shop to help you get the most competitive rates.
There is no time like the present to invest in small business life insurance. Take care of business now and in the future with the right insurance coverage.
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Category: Life Insurance