Business life insurance is essential for every small business owner. On this page you will examine some of the reasons why business owners should examine and consider this.
You probably sacrificed much time and money with the goal in mind of seeing your business succeed. Now you are there, you have achieved your goal, you now look forward to phenomenal growth.
A business succeeds through the talent and hard work of one individual or, in most cases, a team. You want to assure yourself that this business continues.
The owner must look ahead and take into consideration death, disability and retirement of the participants...those who make it all work.
Key Employee Or Key Man Life Insurance
Every business has that one unique individual who makes it all work. This may be one of the owners or, perhaps, an employee. If this key employee should die prematurely it could be quite costly to the business.
If there is sufficient life insurance on the life of this person, however, the company will have cash to help adjust and train a replacement.
The owner of a sole proprietorship and the business itself are one in the same.
The assets and liabilities of the sole proprietorship are applied to both the owner and the business itself. Upon the death of the owner the business dies.
In order to transfer ownership the business must be dissolved and restarted by the new owner. This process can be quite costly. Life insurance can be used to offset the cost and give the new owner, in most cases a family member, a fair start.
A business partnership is a separate entity unlike a sole proprietorship. A partnership consists of 2 or more people who get together with a common goal in mind.
In the event of the death of one of the partners there is an immediate concern about the distribution of the deceased partners shares.
It is wise to legally put together a binding buy sell agreement beforehand that would create a binding and instant market for these shares. The business would continue without interference and the deceased partners heirs would get a fair price.
Small Corporations such as S Corporations, C Corporations and some Limited Liability Companies are also separate entities.
In the event of the death of one of the shareholders the assets of the deceased can be distributed through a buy sell agreement drawn up by an attorney beforehand. The effect will be similar to that of the partnership.
Owning business life insurance can make life much easier for survivors of the owners of any type of business.
Term life insurance may be used as a temporary measure since it costs less but if you are looking far ahead into the future you should consider converting to a permanent policy.
A medical exam may be required to put a life insurance policy in force. This usually depends on the age, health and occupation of the life to be insured. Everything answer given to the agent is verified.
When we think of affordable life insurance, or affordable anything for that matter, we often, mistakenly, think of a product that would require the least cash outlay.
Many life insurance buyers find the 30 year term insurance policy quite attractive. It fulfills their needs. Who, what kind of buyer, would buy the 30 year term policy.
The 20 year term insurance policy is probably the most loved and most bought term life insurance policy. The reasons for this are pretty obvious. People tend to think 20 years when planning long term.