Life insurance doesn’t just protect you and your family — it can protect your business.
For business owners overseeing companies small and large, life insurance can do everything from attracting and supporting your staff to ensuring you stay financially secure in the event of the loss of a business partner.
The bottom line: life insurance works for you by working seamlessly for your business and employees. Here’s a look at some of the benefits life insurance provides business owners like you.
There are Different Options
Life insurance can be tailor-made for your business and yourself. Business owners can choose between either personal or corporate life insurance — or both.
The options continue within those categories. Term life insurance lasts for a specific period while permanent life insurance offers protection that is more long-term. Your budget may dictate which business life insurance to pick as well.
While permanent life insurance tends to be more expensive, term life insurance can be surprisingly affordable.
Life Insurance Can Meet Your Specific Needs
As a business owner, you are acutely aware of what’s required to make everything run smoothly and accelerate growth. Each type of life insurance for business owners meets different business needs.
For example, term life insurance is a useful way to cover business loans or protect your business when a vital partner or employee dies.
Many business owners use permanent life insurance to address such needs as funding buyouts, succession planning, and if they need more cash flow. Permanent life insurance is also useful to buffer savings.
Business owner life insurance still means that designated beneficiaries receive significant support. Both term life insurance and permanent life insurance benefits often get a one-time, tax-free payment when the policy owner passes away.
Additionally, with permanent life insurance, you can also decide how to use it to grow assets and wealth within a policy while you’re living.
It Can Be Used During Different Stages of Your Business
Business-related life insurance has benefits throughout the growth of your company Just launching your company?
Term life insurance is particularly helpful for protecting a new business; it protects you during the most vulnerable period of your business life.
As your business grows, added protection through life insurance goes hand in hand with smart financial planning, protecting your assets and the well-being of employees and their families.
And when you’re thinking of retirement, life insurance can be a vital part of the transition.
It Covers Key Person Death
Employees are always critical to a successful business, especially if the business is small. Life insurance is especially important if your company is small enough to include yourself and one or a few main employees.
If one of your key employees dies unexpectedly, life insurance can help you keep your business afloat in the absence of a critical employee.
It softens the blow enough to keep you on your feet and buy you time to reorganize your team or find a new employee.
Estate planning Life insurance provides beneficiaries, especially children, with financial security. Canadian estate planning life insurance also helps your family further if they are part of your company.
You can use business life insurance to formally leave business shares to children or other family members who work with you daily in your business — or in the very least give them dividends if they don’t work with you day to day.
Another option is splitting up the benefits, leaving children who work for the company shares and, for those children who don’t work with you, cash through your policy. It levels the benefits in the event of your death and can reflect the wishes of each and every member of your family.
It Can Provide a Full Replacement of Your Income
If you own a small business, your family may rely solely on your income. While life insurance can directly address the succession of your business if you want to keep it in the family upon your death, it can also go a long way to cover your regular living expenses or your accumulated debt.
Your debt and monthly expenses can be a factor in the type and amount of life insurance you purchase that will help your family. This can include credit card debt and if you’re still paying off student loans.
You can also think about specific things your family may need in the future, such as being able to cover a spouse’s future retirement, college costs for your children, or a mortgage.
It Can Work For You and Co-Owners
If you co-own your business, using life insurance to cover buy-sell agreements can be a big help. Buy-sell agreements guide the process of what to do with all of the owners’ business shares if they leave the company. Basically, it can determine a fixed price for co-owners to buy another’s shares if they die.
It can also greatly simplify the buyout process through an entity purchase plan or a cross-purchase agreement, which incorporates life insurance into a buy-sell agreement. In this type of agreement, each business partner can take out a life insurance policy on the others. Then a death benefit can be used to purchase someone’s shares when they die.
In an entity purchase plan, the business itself buys policies on each owner and the entity can buy the shares of the deceased.
There is Help Available
If you’re contemplating life insurance as a business owner, it’s highly recommended to work with an expert who can advise you on the best life insurance policies for you and your business.
Ana Martinho is a life insurance agent and investments advisor who works closely with clients across Ontario, Canada, to create the most beneficial policies for themselves, their business, and their family.
Ana is well-versed in the most common types of life insurance policies for businesses and business owners and can help you meet each of your financial goals.
To start the process, simply reach out to Ana via email at [email protected] or over the phone at 416-272-1300.
Life insurance for business owners does not need to be complicated. With Ana as a guide, you can be well on the way to financial security personally and professionally.
Essential Planning for Financial Security
Helping business owners and self-employed professionals grow retained earnings tax-free, pass more wealth to the next generation, and protect their biggest asset – themselves, the executive of the business by acquiring a key person life insurance policy.