Term Life Insurance for Business Owners

Posted on October 24, 2021 by Sim in Business Owners | 0 Comments

Life insurance coverage is beneficial for business owners, helping them pay off their debts, maintain their business, and even care for their family in the event of their absence. The financial safety net that’s provided with life insurance comes with more benefits than drawbacks, making it one of the best things that business owners can do for themselves, their employees, and their loved ones.

One such insurance policy is term life insurance, which all small business owners have access to but might not understand what all of the benefits could mean for them and their business.

What is Term Life Insurance?

Term life insurance is a contract that covers the policyholder for the duration of their life. They not only are covered until death but, beneficiaries will receive a payout in the amount of their coverage. As a business owner, a term life insurance policy owned by your corporation could be the perfect thing to protect both yourself and your company, ensuring that business can continue as usual in the event that the unexpected happens.

Business Owner Benefits with Term Life Insurance

There are lots of benefits when it comes to term life insurance. A few of them that business owners can take advantage of are listed below.

Business Debts and Life Insurance

Though it’s not pleasant to think about, the unexpected can happen at any time. This unpredictable aspect of life creates a need to prepare for the worst, especially when you have loved ones that rely on you. If you have loans used as collateral for your business, life insurance can come in handy too, giving your family the financial support that they need to keep assets in their possession.

For business owners, some business loans require life insurance, which is why term life insurance could be a solid option. Choosing one that expired by a certain date is not a one-and-done thing, and all business owners should consider getting and keeping life insurance for all of those “just in case” moments in life.

Key Employees

Sometimes, it’s not just about you as an owner but about others that help you keep things up and running smoothly. Another benefit to term life insurance is making sure that key employees are covered. This will not only help them care for their loved ones but also ensure that the business will stay up and running and be able to continue in the event of their death.

To do so with help from a life insurance policy, it’s a good idea to estimate the company’s losses that would come along if the key employee were no longer around. In addition, it would help to keep in mind the costs that it would inquire to train and replace an asset like a key employee and insure them as well.

Keeping Satisfied Employees

Besides all of the protection that you can get for yourself when you add a life insurance policy to your setup, there are key benefits that others can enjoy too. Not every employer out there will offer its employees a chance to get good life insurance, something that everyone should eventually look into.

As an employer, the more benefits you offer to employees, the better they will feel about working for you and with you. For employees, term life insurance will usually last for the extent of the employee’s time with your company. You’ll need to pay the premium in most cases but, it’s a tax deduction at the end of the year that could come in handy.

Taxing Beneficiaries

No matter who the beneficiaries are that you choose, they will receive a payout in the event that you pass if you have done extensive estate planning with a life insurance provider. If you have a lot of assets, that could mean that they get a large payment that requires them to pay taxes on the amount that they receive.

That’s why choosing term life insurance should be done with care, working with a professional so that your family and business partners can get all the benefits without the drawbacks.

Apart from understanding the drawbacks, it’s helpful to consider term life insurance and permanent life insurance for business owners, both with their unique set of benefits.

Term Life Insurance Vs. Permanent Insurance

Two of the most popular types of life insurance are term life and permanent whole life insurance. Both of these insurance types are there to help business owners secure their personal and business lives, though they are quite different. Before choosing one or the other, business owners should understand the difference between both.

Term life insurance provides:

Money to heirs to help with estate taxes
Creates an equalized inheritance that separates business from family
Comes with perks that are beneficial for key employees

Permanent life insurance provides:

Replacement of income to secure the family members left behind
Has an amount that helps to cover business debts
Comes with options to secure capital lost by the death of a key employee

Life insurance is never a bad idea, especially when it comes to those who provide for their families and keep their employees employed. It’s a way to secure themselves while having something to fall back on in case something comes up and they need a quick cash option. Not all policies are made the same though, and term life insurance could be a solid option.

Term Life Options Made for You

To find the policy that works best for you, your company, and your loved ones, the first thing you should do is find a professional that knows all of your options. Reading through all of the options and considering the benefits takes time, something that you might not have.

To get the process going and find out which term life insurance policies work for you, contact Sim Gakhar. She not only understands insurance but investments, using her unique knowledge base to build policies that work for business owners of all types. Finding the best policy take time but, today’s policy could build a stronger and more secure tomorrow, which is what every company aims to do.

Essential Planning for Financial Security

Helping business owners and self employed professionals grow retained earnings tax-free, pass more wealth to the next generation, and protect their biggest asset – themselves, the executive of the business by acquiring a key person life insurance policy.

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