A business insurance policy protects your business through a variety of different coverages, but life insurance for businesses isn’t often mentioned. We tend to talk about the importance of protecting: your property and contents, business equipment, bottom line, and you from liability. But protecting the owners of the company is an equally important part of having proper protection so that your business can survive when tragedy strikes.
Life insurance is typically not considered a standard part of a business insurance policy. It is usually purchased by individuals so they can ensure their family members have enough money to stay afloat in the event of an untimely death. Life insurance for businesses is used in the same way: to ensure the company can survive when one of the owners, partners or shareholders passes away.
Insuring your business partners – Buy Sell Agreements
If your business has a number of owners or partners, you should consider a buy-sell agreement backed by a life insurance policy. If one of the owners of the business passes away, this agreement allows the remaining co-owners of the business to purchase the deceased’s shares of the businesses. The amount of life insurance purchased for each of the co-owners would be equal to the value of their share of the business. This allows the remaining owners to retain control of the business so that it can keep functioning while they make plans for the future.
Protecting Someone Valuable – Key Person Insurance
Some members of your business play such an important role, that the company wouldn’t be the same without them. It could be someone in a leadership role, an expert with invaluable experience or a key sales person who brings in a substantial amount of revenue or profits for your business. If losing this person would have an impact on your business, then the business should purchase ‘key person insurance’. This would make sure that your business would be protected if this person dies, is injured or can no longer work due to illness. The money could be used to hire a replacement or cushion the losses your business may experience as a result of the loss.
Protecting yourself – Life, Critical Illness and Disability Insurance
If you are a part owner a small business, it is even more important that you have protection for yourself or your business partner. Many small businesses employ only a handful of people so the owner plays a large role. If the owner passes away, becomes seriously ill or disabled, that could very likely be the end of the business. If you are self-employed then you are at an even greater risk of losing your only source of income if you were to become ill or disable.
Life, critical illness and disability insurance play an important role in your overall business insurance plan. Speak to your Federated Insurance Specialist about adding these types of coverages to your policy based on your unique needs.