Life insurance is usually discussed in regards to families and dependents, but businesses are another insurable asset which can benefit from the protection of life insurance. Life insurance provides ease from the stress of financial concerns and for business owners, it can help to sustain the company through strategic or uncertain economic decisions.
If you are a business owner, then you will likely already be aware of the importance of keeping your business and personal assets safe and secure, but taking out a life insurance policy may not immediately stand out to you as a viable option. A lot of directors and owners may assume that it is solely for protecting your family or other dependents upon your death, but don't give thought to what would happen to the company. What happens if there are outstanding loans, or there are other shareholders involved?
Getting life insurance as a business owner is not only a good way to protect your business, but it also provides several other benefits.
Different Insurance Types
For business owners, there isn't just one type of insurance. This means that there are different insurance policies which can be used to protect different areas of your business. It's important to choose the right insurance policy to suit the different needs of your company and business life insurance can be used to cover the life of significant employees, pay back outstanding business loans or protect a shareholder.
Key Person Insurance
Key person insurance can help to protect important people within your business and is usually used for people who are detrimental to the financial success of your business. This type of policy can help to cover financial losses as a result of losing a key employee, such as replacement recruitment costs and loss of profit.
Relevant Life Insurance
Relevant life insurance is a cost-effective policy that provides businesses with death-in-service benefits for employees. This policy is a good way to attract and retain the right employees, whilst also showing how much you value your employees and their financial wellbeing.
Business Loan Protection
Business loan protection is an insurance type which ensures that you have the right protection in place to help repay any outstanding debts should something happen to owners or directors. This type of insurance can provide crucial financial help during difficult circumstances and enables you to pay back any outstanding loans.
Shareholder protection is an effective policy which makes sure that there is a succession plan in place for the business, should a shareholder pass away. This ensures that the shares remain in the business, whilst family or dependents rely on the financial protection and support they need.
Choosing The Right Business Life Insurance
With different types of business life insurance available, it's important to find out which type is right for your company, ensuring that you give it careful thought and consideration. It's important that you consider the different circumstances in which you could suffer financially should the loss of a key employee occur. With business life insurance, you can protect a number of different situations that may arise, whilst ensuring your company remains both productive and profitable.
When choosing business insurance, it's important to take some things into consideration so that you pick the right insurance. You'll need to assess the right level of coverage you want from your insurance policy and decide on the number of business life insurance policies that you want to include.
To choose the right coverage, you'll also need to consider the size of your company and any previous business insurance claims history. If you're not sure what cover to choose, then it may be worth enlisting the help of an independent insurance broker who can help you choose the right level of cover and assess which risks pose the greatest threat to your company. With the relevant experience and right connections, they will be able to find the best policy for you.
What's The Difference Between Business Life Insurance and Business Life Assurance?
When talking about financial protection policies, the term "assurance" means that you are guaranteed a payout should a death occur for those who are covered under the policy, regardless of when this might happen. Business life assurance is a type of cover which attains personal protection policies, such as whole life or key person insurance, where the individual named on the policy is assured a payout, no matter which age they pass away. When it comes to insurance, protection policies will likely have a set term or a number of years for which you and your business are protected for.
Do I Need Business Life Insurance?
If you are a business owner or are a company partner, then business life insurance is important to protect the company in which you have invested so much into. If you know that your business would experience financial strain if a key employee would pass away, or become ill, then it is time to start looking into finding the right policy which will suit your needs. Business life insurance will ensure that, no matter the future of your business, you can be protected, whilst also ensuring the financial protection of your employees. As part of best practices, ensuring that you have the right insurance policies in place is vital.