In Honor of Life Insurance Awareness Month, I thought I would share the many ways Businesses can utilize insurance as a flexible, effective risk solution for themselves, their business, Business Partners, Key Personnel, and ultimately their family.
Think about what would happen to your business, your business partner and your family should something happen to you and you lost the ability to make money for the business and your family. How long would they be able to survive without your income or contribution? What would happen to you, if the same scenario were reversed, or happened to an indispensable employee would everything be okay? If the answer to any of those questions was less than a resounding YES, this post is for you.
If you are a sole proprietor, you should get a life insurance policy that not only provides a death benefit, but it should also be able to make the lease or loan payments should you become temporarily disabled or pay off the loan should you become permanently disabled or passed away. Most importantly it should replace any income that would be lost if any of those things should happen to protect your family and ensure your/their survival.
If you have a partnership, each of you should take out a policy on the other with yourselves listed as the beneficiary. If one partner should pass away, the surviving partner will use the life insurance payout to purchase the deceased partners interest in the Business.
Key employee insurance is a life insurance you take out on key employees and the business is named as the beneficiary. If that employee passes away, then the company will receive the payout either in a lump sum or in payments depending on the way the policy was established. This eliminates the negative income effects from the loss of an indispensable employee. Although the insurance premiums are not tax deductable, the money of the insurance payout is tax free.
The last small business “must have” insurance is, E & O Insurance. E & O Insurance is a type of professional liability insurance that protects Individuals, workers, and businesses against inadequate work, and acts of negligence.
As you can see Life Insurance can be priceless to your business and a “p.s. I love you”, to your family one last time.