How Life Insurance Benefits Your Small Business
Why would life insurance be relevant to being a small business owner? The fact is, there are a lot of good reasons why it’s relevant, and some experts even rank life insurance as among the most important investments a business man or woman can make. Here’s why:
1. To Prevent The Business From Being Sold.
If, in the event of your death, your family needs to “cash in” on your share of a business run jointly by you and one or more partners, the business may have to be sold to cover their expenses. But if they have the death benefit from a life insurance policy, they can give your partner’s time to gradually pay out your share of the business holdings to them.
On the other hand, if there are business expenses and debts you leave behind, you don’t want that to put your family in the poor house.
2. Your Life Savings May Be Locked Up In The Business
Many small business owners have nearly all of their savings poured into their business, and yet, it may not be possible for your family to recoup that investment or to do it in a timely way.
A term life insurance policy that lasts at least until you retire and start drawing a pension and social security benefits; or, a whole life policy if you will be active in business till the end of your days; can ensure your family has something to live on once you’re gone.
3. In Order To Qualify For A Business Loan
Often enough, a bank will require you to get a good life insurance policy before they approve you for a business loan.
The reason for this is simple: the bank wants to be sure your business won’t fail if you pass away suddenly, making it difficult for them to collect on their loan.
4. Your Business Partners Could Be Left In A Bad Spot
Occasionally, if you and your partner(s) are close enough and trust each other enough, you might have the life insurance policy pay out to your partner or to the business itself. This would be done simply to protect the business from faltering due to your absence.
The sudden loss of a key employee can often cripple and destroy a small business, so life insurance can be used to help prevent that from happening.
5. To Keep Your Family Afloat During a Terminal Illness
If you become terminally or critically ill, and you have a policy that includes terminal/critical illness insurance, this can protect you, your family, and your small business during this very trying and very expensive time.
This kind of cover isn’t on every policy, so you have to check with your insurer about it.
To learn more about how life insurance can benefit your small business, or for a free quote, feel free to contact Flagler County Insurance Agency today!