Do you have life insurance?
You’ve put a lot of hard work into building your dreams. With the right planning, your company can continue even when you’re gone. Business life insurance is a vital part of this planning.
Discover why you need life insurance as a business owner!
Understanding Business Life Insurance
Before you choose an insurance policy, it’s important to know what types of life insurance are available. There are two basic categories of life insurance – term and permanent.
Term Life Insurance
A term life insurance policy only lasts for a specific period of years. It depends on what type of term policy is selected to determine how long the policy lasts. Term insurance does have a few options to choose from.
Premiums are fixed through the term, but if you renew the policy they may go up. To renew a policy, you have to purchase a renewable term policy, which gives you the option to change the policy to a permanent one before the term expires.
Of course, there’s a likelihood that you will pay for the full term and never need the benefit. That’s why many people choose permanent life insurance.
Permanent Life Insurance
There are three types of permanent life insurance in Canada. Term insurance that goes to age 100 is often considered permanent insurance since most will not outlive it.
In addition, you can choose from whole life insurance and universal life insurance.
With whole life insurance, the premiums are fixed the entire time. As long as you pay the premiums, the policy is in effect. This type of policy builds up cash value and pays dividends as well.
A universal life policy gives the policyholder more control over how the money is structured. You can choose your investment options and choose the type of insurance. This requires more active work from the policyholder.
You can expect permanent life insurance to be more expensive than term coverage.
Why Business Owners Need Life Insurance
The primary reason a business owner needs life insurance is to make sure your family can survive financially if you pass away.
You may have loans that you’ve taken in order to do business that need to be repaid. Your family may not be able to run the business if you’re gone. Instead, you can use life insurance to help them repay debts and have income to live on for a while.
Life insurance can also protect you and your business partners should a key person pass away.
A Personal Life Insurance Policy
If you’re the only owner of the business, you may want to look at personal life insurance policies. This would likely cover only you, and would have a specific benefit if you passed away.
You should be careful to choose a policy which will allow your family time necessary to deal with the business properly, whether that means selling it or shutting it down.
Families who have to sell a business operation suddenly, or under time pressure, rarely get the full value of the company. Or, the company may not be worth anything without you there.
Life Insurance For an Ownership Group
If a group of people own a company, you can use life insurance in conjunction with a buy-sell agreement.
The partner who passes away would have a life insurance policy that pays for the remaining partners to buy out the heirs. This allows the business to continue without interruption.
Key Person Life Insurance
Are there people in your company where, if they passed away, it would cause serious disruption to the business?
If so, you should consider key person life insurance. This type of business life insurance pays the owner or owners of the company in the event that an important employee dies. The payout can be used to find a replacement and keep the company moving forward in the meantime.
Get The Insurance You Need Today
Are you ready to get the business life insurance you need as a business owner? Whether you need to protect your own family or you’re focused on giving the benefit to your employees, we’re here to help.
You can contact us for insurance options to get your policy started. Contact us today for a quote!