Business Life Insurance
The establishment of a business takes a lot of time and effort. But accidents and mishaps do happen. Whether it is the loss of a partner or a key employee of the company, both are bound to affect the assents and company severely. Opting for an insurance plan can ensure that your business is financially secure in case of such an event.
Business Life Insurance Helps
Insurance of ‘Key Employees’
There are some employees in a company who have been an integral part of the business for several years or even decades. They are responsible for important and special roles that are vital in the day to day functioning of the company. Absence or loss of these key employees may hamper the company so severely that it might be staring at bankruptcy or closure. This may be due to factors like lack of immediate replacement for the employee or loss of the employee’s clientele.
Business life insurance helps cover financial losses due to the same. The business owner may enroll the key employees of the company as well as himself in these insurance plans. The assets pays for the insurance of these employees, but unlike life insurance, the company itself is the beneficiary. On loss of a key employee, the business is provided with financial assistance that is aimed at finding and training a replacement for him and to make sure that the company has enough funds to continue running.
Retention of Employees
Various insurance plans help the firm owners retain their employees. These may accomplish the same in various ways:
- Buying Life Insurance for Employees: The organization’s owner may insure his employees by paying for the life insurance cover of the employees in part or full. In this case, the business might be refunded its share of the premium payments by the insurance company. Also, the firm gets tax deductions on the amount of premium paid.
- Providing Deferred Compensation Plans: Various employees of the company may be offered an option of receiving a fixed monthly amount upon their retirement. The same amount may be deducted from current salary or bonuses to be paid to the employee. It ensures lower taxes for the employee as well as gives him financial security upon retirement. The family of the employee may also be compensated in case of death of the employee. The employee agrees to work with same company until retirement and signs a non-compete upon retiring.
Continuation of Business
There is always uncertainty in life and death comes without forewarning. In case there is death of the owner or a partner in the organization, the insurance plan can help in continuation of the business. To accomplish the same buy-sell agreements are signed. When the sole or one of the owners of the firm dies, it is mandatory for the key employees, or other company owners to buy the share of the deceased in the business. This allows the business to continue functioning without any new entity being introduced. The life insurance policy may also cover the money required for purchasing the business interest of the deceased.
Debt Liquidation Coverage
In scenarios where the institution is under considerable debt, a sudden death of the owner may cause the lending company to start pushing for debt recovery. If they decide upon liquidation, the personal assets of the owner may also come under the consideration. Life insurance with debt liquidation coverage ensures that the personal assets of the owner are preserved.
No matter whether the firm is big or small, they have a lot to gain by going for business life insurance. Ensure that your company has the brightest possibilities for future by getting it insured today.