The main aim of business life insurance, is to safeguard your organization against events that can hamper the effective running of the business.
It is a normal life insurance policy, owned by a business instead of an individual with the insured being either the owner of the business or one of the owners of the business.
What is Business Life Insurance
Business life insurance works more like life insurance, wherein your policies are created to cover a key person, protect the payment of loans as well as cover shareholders. It protects the aspects of your business that relies on your input, and ensures the financial stability of your business as well as employees.
How Important is Business Life Insurance?
As a business owner or co-owner, you need business life insurance to safeguard your business in the case of any eventualities and protect your business from crumbling.
Business life insurance is also very important if you don’t want to end up having one of your partner’s spouses or ex-spouses running the company with you. It also protects you from having a bank own your partner’s share of the business in the event where he/she is forced to file for bankruptcy.
It also acts as protection for your family especially if you have taken out substantial loans using your family’s assets.
Factors to Consider With Business Life Insurance
Key person coverage
The key person here, maybe an owner or senior member of the business. Considering this factor is essential mostly for smaller business that depend on a key person for the overall wellbeing of the organization and it’s employees.
If the key person dies, the policy safeguards against loss of profit or accumulation of debts. The lump sum can also come in handy for the considerable costs incurred when hiring a new senior member of staff or replacement.
Since shareholders are a huge part of your business, it goes to say that they can benefit from the cover too. If a shareholding director dies, this business life insurance offers the remaining shareholders the funds they need to buy shares from the deceased.
Business Loans Coverage
Here, if you are incapacitated by a serious illness or if a senior staff member passes on with loans and debts that are still outstanding, it may pose a serious threat to your business, thus insurance for business loans secures your business against outstanding loans rent or mortgages and keeps your business afloat in the case of any eventualities.
This is dependent on the size of your business although employers also have the option of taking out a tax-efficient policy for their employees. When an employee dies, a lump sum is paid to the employee’s estate. It also protects employees with a terminal illness during the length of the policy.
With business life insurance, you, a senior manager, shareholder or employee are sure of preserving the financial stability you’ve created over the years. It is must-get insurance policy, if you must safeguard your people, profits and the future of your business and family in the event of any eventualities.