Owning a business in the U.S. is an integral factor of our economy. In fact, the U.S. has 28.8 million small businesses, comprising 99.7% of all business in America. While risks abound in entrepreneurship, owners can take measures to protect themselves and their companies by purchasing life insurance.
Here are some essential ways that life insurance can help business owners:
Coordinate buy-sell agreements Buy-sell agreements are an official contract that outlines how to transfer business ownership should a founder leave due to disability, death, or retirement. And a variety of benefits for buy-sell agreements exist. One essential item is the fact that having one can create liquid assets for paying estate- or death taxes. In addition, owners can fund these agreements with life insurance premiums. Keep in mind that these payments are not tax deductible.
Cushion company with key-person coverage Could your business continue operating should one of the essential people in your company die prematurely? Key person insurance coverage helps protect your business from the untimely death of an owner, founder, or crucial employee. Should the company lose one of these individuals—as the beneficiary—the business receives the insurance payout. This benefit helps the company to keep operating while owners put next steps in place to overcome the loss.
Protect personal lives Business owners who buy personal life insurance ultimately protect their families. If your loved ones are unable to meet financial obligations without you, an unexpected death could leave your family in a lurch. Perhaps you took out a substantial personal loan to get your business up and running, or you have a long-term lease on your facility. Would your family be able to pay this back if you are no longer financially there to help? Or maybe the income you have from your business is the only money your family relies on. How would they make up that income without you? A personal life insurance policy can help protect your family when they may need help the most.
Overall, if you are a business owner—and you do not have life insurance for yourself or your company— you could be setting yourself up for potential calamity. With some proactive steps, however, you can put in place the life-insurance strategies you need to keep your operations humming. If you would like to discuss coverage for your business, we’re more than happy to help. Contact us at Penny Lane Financial today, to learn about ways to protect your business and your family.