You might think of life insurance from providers like Final Expense Direct as something you only obtain when you’re old, or when you have children who are depending on you. But there are other uses for life insurance beyond that. You should also ensure that you have a life insurance policy if you own a business. Here is why and what you need to consider.
It might feel like just another expense salesmen are trying to get out of you, but as a business owner a life insurance policy can be beneficial if something happens to you. If you die, a personal life insurance policy could help to ensure that your business and legacy continues. This also protects your employees and business partners. You’ll allow regular operations of the business to continue because you have provided a cushion of money that can be useful to those you have left behind to work. After all, you don’t know what is going to happen in life and you certainly don’t want to leave stress and chaos behind should you die. Understandably, you probably have a lot of questions about life insurance. Don’t worry, this website might be able to answer them.
Understanding Insurance Policies
There are two types of life insurance policies you need to know about. They are:
- Term Life Insurance
A term life insurance can be more budget-friendly because it doesn’t lock you into paying premiums for life. Rather, you choose a specific amount of time for which you would like cover, such as 20 years. This comes in handy when you want to cover a certain activity (such as paying off a mortgage) and you won’t need to worry about it after its term has passed. Interestingly, you could use a term insurance policy for your business too, such as if you are going to retire within a certain amount of years. A policy could then allow your partner to gain cover during this time, making him/herself the beneficiary of your insurance. If something happens to you, your partner will gain a pay-out and your part in the company will be shifted over to them. .
- Permanent Insurance
You could choose life insurance to offer an accumulated amount of cash to be given to your business should you die. This amount can be used by your co-owners to gain your equity or to deal with the storm clouds of debt. How it works is that some of your premiums will go to insure your life and the other part will be invested.
The catch? It causes you to shell out more money than a term life insurance and the policy will stick around for a lifetime, but if you need coverage for a long time then it could be beneficial because the full amount will be paid out when you die (as long as you have been diligent about paying your premiums). Visit websites such as Affordable Life USA to know more about The Types of Life Insurance Explained so that you could make a wise decision while choosing the best policy for you.
Think About How Insurance Could Help You
Different people will have different reasons for using life insurance in the office. For instance, would the insurance money help to pay salaries of employees or cover expenses? What about the cost of training someone new to fill the position you’ve emptied? These questions are important so take your needs into consideration and then calculate the costs with your accountant to choose the right policy.
Tweak Your Policy for Maximum Benefit
You can make your life insurance policy work for you and your business by considering various ways in which you can tweak it for your situation.
- Choose a Buy-sell agreement. What this means is that if you die, your business partner will be able to acquire the money to buy your portion of the business but the amount would already have been stipulated – it’s sort of like an pre-agreement between the two of you.
- There is also a key person insurance option that could be handy. It means that if you were a key player in the business, you can decide that the insurance amount will be paid to the company after your death. It gives some money to your co-owners during the difficult time, at least until they get back on their feet.
Both of the above can be beneficial and should be discussed with your co-owners to minimise catastrophe should you no longer be in the picture.
Having life insurance as a business owner offers many benefits as well as peace of mind. You’ve spent years building your business, after all, and you don’t want your dreams-or those of your co-owners-to die should something happen to end your life prematurely.