Small Business Owner? Here’s Why You Need Life Insurance

life insurance small business

If you’re a small business owner, then having life insurance could be a great investment for you and your company. It’s not the easiest topic to talk about nor do we particularly relish in thinking about it either, but considering the practicalities of your death is part of a decent business plan. When you die, your small business will be affected too, including your employees and any partners who may have a stake in the company. Having life insurance can play an important role in ensuring your business continues after your death and help lessen the financial strain on your family.

Why Do You Need It

1 – Your family may depend on the income that your business brings. If the business stops suddenly, they may be left in a difficult financial situation.

2 – Your family may not be capable of running the business after you die and they may need to sell it, while incurring running business expenses in the meantime.

3 – If you have business loans, your family may be left with the burden of having to pay them off. Worse still, if your personal assets were used as a collateral for a loan, they could lose their home. 

Having life insurance will bring financial protection to your family in these three situations.

What Type of Life Insurance do You Need?

There are different types of life insurance out there and the best one for your will depend on your circumstances.

1 – Personal Life Insurance.

This can provide your family a vital financial safety net, which includes business loans and debts that they will become responsible for after your death. This can cover non-business obligations such as:

  • Mortgage payments on your house.
  • Future college or school expenses for your children.
  • Income replacement in the case that your family depends on your income.

2 – Buy-sell Agreement

This type of insurance allows any business partners you have buy out your share of the business. It means your family don’t need to deal with it by themselves and ensures a smooth business transition if you or another partner dies.

3 – Key Person Life Insurance

If there is someone in your business whose skills and expertise are vital for the success of your company’s operations, then having key person life insurance can be a great investment. In the case this key person dies, this insurance will compensate for any losses incurred as a result of their death.

It can be hard to know which life insurance policy is best for you. If you have any questions, then please reach out to us – we would love to help! Just send an email to gregpendleton@iamasssociate.co.uk or call 07852295532 and ask for Greg.

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