If you own a business, you likely have a lot on your plate. One thing you might not have considered is life insurance for your business. This is an important part of running your business and it shouldn’t be overlooked.
Life insurance is important for all people because it offers protection in case of death. It’s often necessary for those who run their own businesses too. If you are a business owner, you should make sure your business can still function, even if the unthinkable happens. There are several reasons that your business might need life insurance.
SBA Loan
In order to get an SBA loan (Small Business Administration), you must have insurance on your business. The purpose of this is to make sure that both the lender and the owner’s family are protected in case of an unexpected death. When you get a life insurance policy for an SBA loan, you must list the lender as the primary beneficiary. You will also need to get a policy that is for the full amount of the SBA loan.
Once the SBA loan is paid, it’s still a good idea to keep the life insurance policy. This ensures that the business owner’s family is provided for. The primary beneficiary can then be changed.
Key Person
In most companies, the loss of the business owner would mean the business takes a big hit. One example of how this would affect a company is lost income. Life insurance can be used to protect the company in case the key person in the business dies unexpectedly. The company then gets a death benefit to keep the business running.
The death benefit should equal the revenue loss and the costs needed to run the business. Plus, it should cover the costs needed to find a replacement for the key person.
Buy-Sell Agreement
According to a nationwide insurance agency, InsureChance, buy-sell agreements can be funded by life insurance. Each co-owner of the company buys life insurance policies on the other living co-owners. Then, if one co-owner passes away unexpectedly, the other co-owners are the beneficiaries. They will receive death benefits from life insurance policies. This can then keep the business running smoothly.
For Your Employees
In addition to getting life insurance for a key person in your business, you should consider getting insurance for your employees. Some of your employees might play a key role in keeping your business running smoothly.
By ensuring some of those key employees, you are making sure that the lost revenue and their tasks are properly taken care of. Without this, you may be left with tasks that are not complete and revenue that cannot be made back quickly.
Conver Your Business
These are all good reasons to look into life insurance for your business. In some cases, such as the SBA loan, it is required. Be sure to protect both your business and your family in case of an unexpected death. You can rest assured that everything is being taken care of at home and at your business.
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