Starting a business can be an exciting entrepreneurial journey to embark on. Running a business comes with a lot of risks, some of which you can manage. An example, and a pretty important consideration for managing risk is getting life Insurance for business owners.
So, what is life insurance, and how does it relate to you, a small business owner?
What is Life Insurance?
Life insurance is a signed agreement between you and an insurance company. It involves you paying a premium consistently to obtain the benefits of a one-time payout to your beneficiaries when you die. This amount of money is only available to your choice of beneficiaries.
For small business owners, not only would life insurance protect your business and its critical assets. Life insurance for your small business would provide permanent leverage of trust and benefit towards your employee group and impending ones, especially if you have plans in existence to scale up.
In this short and detailed article, we’re going to show you the advantages of getting life insurance for business owners and why we think it would do your business some good.
Why does a business need life insurance?
In simple terms, a business owner needs to think about the future of their company. This includes thinking about revenue growth, day-to-day business activities, profit margins, and hiring employees. If you’re to consider all of this as beneficial, you should consider life insurance.
Why Life insurance? It will help you cover impending debts in your business. It would be best to have life insurance to keep your company and employees safe and protected from unexpected circumstances like death. If this happens, people connected to them and your business don’t have to suffer because they have the finance to fall back on.
In cases where the company has to close down or downsize, life insurance can cover expenses or severance to affected employees. In cases of business loss as a cause of an employee leaving, this insurance can cover damages and loss margins. Life insurance can also cover the expenses of getting new employees to take over existing job positions.
Don’t afford yourself the significant risk of loss. Your employees and co-workers are counting on you.
Types of Life Insurance for Your Business
There are majorly two types of life insurance your business can operate, depending on your revenue and the size of your company.
Term Life Insurance
Term life insurance provides coverage for a fixed number of years (e.g. 20 years).
It as a result, it offers protection for your business and employees’ financial obligations during that period of time. The key point is your employees deserve such life insurance benefits, even if you’re just starting and these are often provided in group benefit plans.
Permanent Life Insurance
As the name infers, permanent insurance deals with your business on a more permanent basis. It gives you access to your cash and coverage for a lifetime. Some permanent insurance includes a cash value, meaning you have the option of borrowing against it while you’re alive or saving it as a death benefit for when you’re no longer around.
Permanent life insurance can be quite expensive relative to term insurance. However, it is an asset in your business that can automatically grow because of the feature called cash value. It allows your money to grow even inside your policy.
How Do I Buy Life Insurance For My Business?
There are some key things to note if you would like to know how life insurance works to properly suit your business’s needs.
Calculate your coverage needs and business expenses
It would be best if you got down to the details. How much does your business need to get by in a year? Get an accurate total to determine how much life insurance coverage you would need for your business and every person it compensates to survive without you.
Do your monthly expense calculations, your one-time needs calculations, and just general planned expenses for a smooth workday.
Choose your preferred insurer and apply for life insurance
Now that you have your coverage needs all determined, it’s time to submit your application. An life insurance company with good reviews like Manulife can help you out with this step, or you can do it yourself.
First, you need to do your research and arrive at your chosen insurer. Next, you would go through the process of applying for life insurance. Make sure to have all your needed details at hand to go through the application smoothly.
Go for a medical examination as instructed by your insurer, wait for your approval, and finish the process by signing your insurance.
Most medical exams needed for life insurance are free and without expense. Once you’re done with your medical examination, you would have to wait for your insurer to approve it, after which you can then be on your way to closing off your application process by signing the agreement.
The Bottom Line
Running a business is difficult enough. There are a lot of moving pieces to think about. Having downside protection for yourself and your employees through life insurance should be an important part of your business continuity planning.