Life insurance does not just financially protect your family. It can also efficiently safeguard your small business as well. Several features will support your family and make sure that your business will continue to thrive in your absence. In addition, small business owners who choose to purchase a life insurance policy should look for one that offers protection to any business interests that may be part of the estate. Here’s a look into how a life insurance plan can protect your business.
Individual Death Benefits
Individual death benefits will pay the death benefit to your family. Funds will be used to take care of any debts or financial obligations. This type of death benefit will provide financial support to family members who must go on without you. In addition, it will help living expenses, retirement, and college tuition for children or grandchildren. Individual life insurance policies are purchased instead of the small business. Since an individual policy is purchased outside of the business, there is no obligation to use the money for business purposes unless there are outstanding debts in the owner’s name.
Buy/sell agreements give any remaining business owners an option to buy a deceased owners’ interests in the company. Family members will receive an amount that was agreed upon before the business owners’ death. With this type of agreement, the transactions are completed quickly and efficiently so that family members do not have to wait to receive their funds. Buy/sell contracts offer the option to the remaining family to sell their loved one’s interests in the business. They may, however, choose to keep the business and assume the deceased owners’ role.
Key Person Insurance
Key person insurance is a policy written to protect the interests of the business or company the person owns or manages. This type of policy is purchased by the industry and is meant to provide the business with any potential earnings that may have been earned if the deceased had continued working. This type of policy does not benefit the family (unless the family owns and operates the business). However, key person insurance is a good way for a family to keep a business going if the loved one who runs it passes away unexpectedly.
Owning a small business is a great way to do what you love. Having a life insurance policy in place will help your family carry on your legacy if something unexpected should happen to you. Call our insurance professionals at Randy Jones Insurance Services at your earliest convenience to get the coverage you need to protect your business. There are several life insurance policies you can choose from to protect yourself, your family, and your business. Knowing what you want to accomplish and the best way to achieve it are the first steps to ensure your business remains intact after a devastating loss. So make the call today to get the peace of mind you deserve.