Business Life InsuranceWhy You Need itIf you’re wondering whether business life insurance is necessary or not it may help you to ask yourself some key questions in order to prepare and protect your business.
After all, you’ve worked too hard getting your asset off the ground to let its fate be so uncertain. Business insurance is an excellent tool to use for risk management and should be an integral part of your business plan. To get started learn more about Term versus whole life insurance, to see which one is right for you. Uses of Business Life Insurance
Key person Life InsuranceIt’s no secret that if either yourself or one of your key employees die then your business can and quite possibly will be affected. So if your business relies heavily on an employee then try to think ahead about how this would affect your business. How long would the business need to recover from the loss? When you purchase key person life insurance the risk of that loss to your asset is lessened, because the business is the owner, premium payer and beneficiary of the life insurance policy. The key employee would need to grant permission for this coverage. However, the policy funds could be used to offset the costs of replacing the employee and other losses suffered as a result such as business relationships, contacts, etc. Executive BonusAn executive bonus is when an employer will give a salary increase in the form of premium payments to a life insurance policy for the employee. The employee has complete control over the policy since they own it. Buy Sell Agreement or Business Continuation AgreementA buy sell agreement determines what will be done with your business if you die or become disabled. When you enter into this agreement, you or your heirs are legally obligated to sell your share of the business to a partner or key person if something should happen to you. It is sold at a predetermined price. A small business life insurance policy could be used in this situation to fund the purchase.
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