Why should i have life insurance as a business owner or key individual?

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As a business owner you put hard work and dedication into creating and running your business. A business life insurance protects that investment:

• The business life policy payout is tax-free income and can cover business loans, such as mortgage payments, and other debts
• By protecting the company, the policy will protect employees’ jobs
• If there are business partners, and there is a death of a business partner, the policy payout can help redistribute the deceased business owner’s share of the company
• It can be reassuring for employees to know that the company’s financial future is protected
• Providing life insurance as part of an employee benefits package can help secure a contract with the employee.
• Premiums you pay for employee life insurance policies are tax-deductible

Key Person Life Insurance

Key person insurance is a type of individual life insurance where the business is the beneficiary. Key person life insurance provides your business with funds if an key employee, such as the business owner, happens to die.

Setting up key person life insurance can help replace lost revenue and give your business partner time to sort out next steps for the business. 

Buy-Sell Agreements

A buy-sell agreement is a contract between you and your business partner, which you can use individual life insurance to fund. If one of the partners dies, a buy-sell agreement allows the surviving partner to buy out the deceased business owner’s share of the business.

 What are my options as a business owner?

Term Life Insurance

Term life insurance is the most flexible and affordable type of coverage, making it a good option for most people. With term life insurance, you have a lot of leverage with you way you want the policy to be handled, you will have power on deciding on how long you want the life insurance policy to last. Once you have reached the end of the term you can choose if you want to renew or stop the policy.

Term life can provide cost-effective protection during the crucial years you are building up your company. You are even able to purchase life term insurance for your business partners

Permanent Life Insurance

With permanent life insurance, your insurance is effective for a lifetime as long as you keep up with the premiums. Once you die, your beneficiary will receive the life insurance benefits you’ve invested in over the years. Permanent life insurance also builds cash value, which you can tap into while you’re living to cover personal or business-related expenses.

While permanent life insurance costs more than term life insurance, the guaranteed payout can be useful if you want money you can count on to help your family or business partner cover expenses after your death.