You have owned your business for numerous years and you know that your family depends on you for financial support. If you were to die, they wouldn’t be the only ones who are dependent on you. Your employees and partners do as well. Your death could mean the end of everything you work so hard to build. This is the brief explanation of why you need life insurance. But there is more you should know.
Why You Need Life Insurance
Your family depends on your business’ income to survive. You may have taken out loans backed by your family’s assets to start or grow your business. You family members might not be equipped to take over the business if you die. Your family may also be unable to sell it easily; which in turn could leave them without income or even in a position to lose their home, if it’s collateral for the business loan.
Life Happens, a life insurance industry group, explains it this way: “When the family is forced to sell the business quickly, they may have to sell at a discount or during market conditions that make the business less attractive. In other cases, the business may be worth very little without the proprietor or partner.”
If you have partners, your family might be unable to step into your role and your partners might not be able to buy out your share quickly, Life Happens notes. In this type of case, your family might have to help run the business during a stressful time or be forced to sell off the company. Your business may also rely on key employees whose deaths could seriously dent earning or operations.
What Life Insurance You Need
In each of the scenarios listed above, life insurance could save your small business or protect your family. Each one involves a different sort of policy.
Personal Life Insurance Policy would help your family pay off any business debt and cover living expense after your death. Your family would then have time to figure out what to do with the business.
If your business has multiple owners, you can combine life insurance policies on each partner with a buy-sell agreement. This agreement stipulates that on the death of a partner, the remaining partners can buy out the surviving family’s share at a previously agreed price. The life insurance policy pays for the buyout.
The final kind of life insurance you need for your business, is called key person insurance. This is a life insurance policy that protects against the death of a critically important employee. In the event of their death, the insurance pays the owner or owners of the business.
Call Us Today
R.C. Keller & Company have offered small business owners life insurance products since 1910. We have several companies and policy types to help protect your family and your business. Call us today at 847-907-4520 to discuss your options.