WHAT YOU NEED TO CONSIDER FOR A LIFE INSURANCE IF YOU OWN A BUSINESS
Salesmen of insurance will typically say that if there are people counting on you, you need to get yourself a life insurance. When it comes to choosing coverage though, the needs of entrepreneurs can be different that other individual’s. If you will prematurely die, a personal life insurance can replace your income therefore protecting your family. In the event an owner, partner or key employee dies, life insurance could also safeguard the business can continue. Here some things you need to consider when you’re on the market of buying a life insurance as an owner of a business.
Term Life Insurance
This insurance is a simple option. You can choose a death benefit, which is the amount of money your heirs would be paid for when you die, and a term of how long you want that coverage to stay in place.
Term life insurance is what you can also get if your need is temporary like covering a mortgage balance or college costs. It is also a great option for any business with partners who may be retiring at a certain date in the future. The downside of this however is that it is only good for a specific length of time. You could be without coverage if you and your partner plan to be in business forever. You may want to consider a permanent policy instead.
Permanent Life Insurance
This policy offer both insurance and investment component usually called cash value. A portion of your premium will pay for the insurance element of your policy while another portion will go to the investment part of it, unlike term insurance which is insurance only. Once you are done paying term insurance premiums, you will get nothing when the term is over. On the other hand, permanent life insurance policies will always have the investment part even if your policy lapse.
The cost of this type of insurance is more expensive than term insurance, but as long as you keep on paying the premium, the policy stays in force for your lifetime.
Things to consider
- Your family. Life insurance will protect your family of any loss of income or to maintain a certain level of lifestyle in the event of your untimely death.
- Your business. Insurance is a must for business owners for income replacement and to protect the future of their businesses. If an owner, partner or even a key employee is suddenly gone, a business can deteriorate very fast. If you have the right insurance in place, your partners will have enough capital to keep the business afloat.
How much and where to buy
The amount of insurance your business or family needs will depend on your expected income over your lifetime, future expenses and debts as well as the general structure of your business. Before starting to shop for any insurance, make sure to go with a top rated insurance provider no matter what type of policy you will buy. This is to ensure that you’re buying from a company that will be around for decades to come.