Life insurance: it’s not just for families

Submitted by statecreative on Mon, 02/23/2015 - 21:09
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If you’re a family breadwinner, you know how important life insurance is to your family’s financial future. But if you’re also a business owner, do you have life insurance to protect your company’s financial future?

Think about your most valuable asset – the people who work with and for you. Most companies have invaluable employees they would never want to lose. People are often a company’s biggest assets. If you have people that are absolutely crucial to your revenue, profits, credit worthiness, and even business continuity, it makes smart business sense to protect your company’s financial well-being from the loss of those assets.

What kind of life insurance does your business need?

That depends on your situation, but here are three types of coverage to consider:

Key Person

Let’s say you have an employee who manages the company financials and the company’s largest accounts. If that employee suffers a fatal heart attack, what happens to the business?

If your company has a key person policy for him, you will have the financial resources needed to hire new talent, retain current employees, and keep the business thriving. But without this coverage, your business could be looking at significant financial loss, employee layoffs, problems with creditors, and business closure – not to mention personal financial risk to your family.

Bottom line: If your business would be adversely impacted by the loss of a key person, you need this coverage.

Buy/Sell

You and your business partner co-own and operate a successful company. Then one day, your partner dies in an automobile accident. Now what? Will you have the financial resources to buy out her interest in the business and continue on? After all, there are people relying on you – your customers, employees, and families – and those needs don’t go away when a key owner is gone.

If your business has a buy/sell policy, keeping the business running will be much simpler. Just like a family’s will that outlines how assets are to be allocated, a buy/sell policy creates a blueprint for business succession – who will buy the business and for how much – and provides cash to fund the agreement. Without this coverage, your business could face a host of financial and legal headaches, loss of employees, a business shutdown, and bad blood between families.

Bottom line: If your company’s future would be in jeopardy if you or a co-owner died, buy/sell insurance should be part of your business continuation plan.

Executive Bonus

When you have “A list” players on your team – the kind of people who drive your business growth and profits – you want to keep them on board, and keep them away from your competition.

How would your business be impacted if you lost one or more of these key executives? Are they vital enough that it’s worth rewarding them with a lasting incentive? If so, executive bonus insurance is an affordable option that lasts, unlike cash bonuses that can quickly be spent and forgotten.

Executive bonus coverage is a win-win. For employers, premiums are generally tax-deductible, they can choose who receives the benefit, and they can cancel anytime. The employees get life insurance at little or no cost, the policies are portable, and the policy may accumulate tax-deferred cash value and be used to a fund retirement or a child’s education.

Bottom line: If your business has “A-listers” you can’t live without, executive bonus life insurance is a great retention tool.

People are the lifeblood of your business, and these coverages offer protection for the life of your business. For more information about how these coverages can protect your profits, see the life insurance experts at Heffernan Insurance Brokers.