Life Insurance For Small Business

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Benefits of Life Insurance for Small Business Owners

Everyone’s life insurance needs are different. This is especially true if you’re an entrepreneur who wants to preserve both your business needs and your personal assets if something were to happen to you.  Life coverage ensures that your business and dependents, particularly your family, are financially secure when you pass away. 

Planning for your business’s future should include long-term financial planning for yourself, your family, and anyone else who relies on the business financially. This means thinking ahead to your goals and doing your best to plan for what you want. During the Covid 19 situation, many businesses were adversely affected. With a group plan, if you or one of your employees fall ill, depending on your policy, some benefits can help you with the financial burden.

Insurance for Key Employees

Key person insurance is another benefit that is a vital part of the business operation. There are several people in the company whose death could have a detrimental impact, not just the owners. If you can think of a  person who is a vital employee, his/her death or disability could result in a drop in sales or productivity for the company, they are a key person.  This could change over time and this is why it is important to have a broker you can talk with and help you to plan properly with the right life policies and retirement savings and retirement income and the company budget as well as your own.  

An insurance policy on this key employee could help the company in covering the revenue that individuals would have brought in for a specific period of time. Buying insurance on a key employee gives time for the corporation to recuperate, rehire and train a new candidate that can fulfill that position. Or give the key person time to get back on their feet and come back to work.  Essential employees may only be working for a few years, it is usually better to insure them with a term life insurance policy.

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Buy-Sell Agreement in the Event of A Business Partner’s Death

If there is a buyout (buy/sell) agreement in place, your living members have the right to buy your portion from your estate. This assures that the surviving business partner has sufficient funds (or a portion thereof) to buy out your partners. In the event of the death of one of the shareholders, an agreement will help to decide on how the shares can be purchased at the time of death. This is also known as key man insurance. Insurance for business owners is very important.

Proposed insurance for business owners should reflect the buy sell agreement and how much the shares will be purchased for. This should all be part of the plan from the beginning and if you’re not at the beginning, plan now.

It is advisable for small startups who want to build their company for the long term to purchase their small business insurance when it’s young. Because the cost of insurance will be lower and then they will have a track record with the company while they have less employees.  Less employees=less claims=better rates as time goes by.

Frequently Asked Questions

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