A life insurance policy isn’t only a personal financial tool—it can be a critical part of securing the future of your business.
As a small business owner, you’ve worked to build something that stands the test of time. You’ve sacrificed, innovated, and established yourself in the marketplace. Now, you have people counting on you. The customers purchasing your service need a seamless experience. The talented team you employ needs a paycheck. What happens if catastrophe occurs? How do you ensure continuity for the people counting on you?
Here are 3 ways a life insurance policy protects small business owners:
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The right life insurance policy is the perfect first step into succession planning. No one wants to talk about planning the worst-case scenario. By having the discussion with your team and with a trusted local insurance agent, you can discuss a course of action that eliminates pressure from the people you work alongside. It can also protect your loved ones from shouldering a burden that could be avoided with the right tools. If you have business partners, a life insurance policy can fund a buy-sell agreement, ensuring a smooth transition of ownership without financial strain.
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Ensure business continuity by putting a strategy in place and equipping your company with the resources to implement the plan. Once you’ve set a succession plan into motion, you can make sure there are financial resources in place to support your team if they must carry it out. A life insurance policy can alleviate the financial pressures that often accompany an emergency. Without life insurance, your business could face liquidation or ownership disputes. Your team could be asked to cover any loans, leases, or financial obligations left unresolved. A life insurance policy ensures any outstanding business debts don’t fall on your team member’s shoulders. By putting a policy in place, you are giving your staff and stakeholders room to breathe (and grieve) in the event of a tragedy.
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Policy payouts from a life insurance plan help to keep operations running while your team adjusts to their new reality. For many small businesses, the company’s success is linked to the founder’s personal expertise, leadership, and relationships. A solid life insurance policy offers funds to cover lost revenue and maintain operations that may have fallen solely in your hands as leader of the company. Similarly, you can take out a key person policy to cover any revenue lost in your absence and assist with the financial cost of hiring and training any necessary new team members. If you’re a family-owned business, a life insurance policy becomes even more essential. Without comprehensive life insurance coverage, your family may be forced to sell your business out of pure financial motive. If your family hopes to keep the company for generations to come, a life insurance policy makes this possible in the wake of unthinkable circumstances. A properly structured policy ensures your loved ones receive financial support while business matters are sorted out.
These are just a few of the life insurance policies available to you as a business owner:
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Known to be one of the most affordable coverage options, term life insurance is a short-term solution, offering coverage for a designated length of time. Once the term ends, coverage expires. This is ideal for covering business loans, satisfying short-term business needs, and establishing key person insurance over the length of time someone may be employed within your company.
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Permanent life insurance never expires as long as premiums are paid, providing lifelong coverage to the policy holder. With this particular type of policy, a cash value grows over time and can be used to withdraw money or be credited toward the premium. In business, permanent life insurance can be useful for buy-sell agreements, estate planning, and ensuring long-term financial security for any beneficiaries.
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Recognizing that a business suffers greatly from the loss of knowledge and expertise of any primary leader or founder, business-owned life insurance policies owned by the business can be used to protect against financial loss from a key person’s death.
Life insurance is an essential tool for small business owners, offering peace of mind that your business and loved ones will be protected no matter what. A well-planned policy can mean the difference between your business thriving or failing in your absence.
We know these can be sensitive conversations and our team is ready to guide you through the process from start to finish. Always remember, the premiums you pay are influenced by your age and medical history, so it’s important to act sooner rather than later.
Reach out to our team and find the policy that’s right for your business, ensuring your legacy lives on.
