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.
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.
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.
Types of Life Insurance
Permanent Life Insurance
Sometimes whole Life insurance premiums are paid for the rest of the policyholder’s life. There are some that can be paid up over a period of years as well and then they are considered a paid up insurance policy.
Permanent life insurance can also be used to finance a buy/sell agreement under certain circumstances. Cash value can be an interesting way to do a lot of things however you need to understand how it works.
Term Life Insurance
If you have dependent family members or others, term life insurance is the most straightforward solution. If your business is not a family business, you will probably need not one life policy but 2 policies, one where the business is the beneficiary and one to cover your family’s needs.
It’s highly possible that if something were to happen to you and you have this in place that this will not spell the end of your business. Life coverage can give the company enough cash to pay off its debts, such as loans, workers, suppliers, and rent. The premiums will help the company in terms of employee benefits and tax advantages for businesses.
Universal Life Insurance
Universal Life Insurance is broken into investment components, and the cost of insurance. This product is good for knowledgeable investors as it has an investment component that you should have a knowledge base for. Again the cash value can be a great asset if understood and done correctly. It is best to talk with someone who understands this type of policy and make sure it is right for you instead of, say, a term policy
Why Choose Experior Financial?
At Experior Financial, we made insurance for a business owner easy and provide the best life insurance policies in Canada. We shop the large market similar to a car insurance broker. We have many insurance partners across North America to help serve our clients well. Our agents are excellent at providing financial solutions and security to protect your business. Our agents have access to proprietary software to make sure that you get the coverage you need.
Our brokers deal with all the types of business insurance that you will need. Our services help protect your business against any unforeseen circumstances. Experior Brokers have the right experience to help business owners in their financial plans and budgets.
