Many of us have personal life insurance. It offers our family financial security if the worst happens, and provides us with peace of mind. It is seen as a sensible choice to make in life, so why isn’t business life insurance taken with the same level of seriousness?
After all, if something happened to you, you would want your business to remain standing and your employees to be paid for their work. Here’s a little more about it, as well as some of the things you need to consider.
What is Business Life Insurance?
The term Business Life Insurance can cover a number of different insurances we will lay out in this article but it is pretty much the same as regular life insurance, in that it would provide a lump sum to protect your business and employees.
It gives employees financial stability and can also help your business tick over while everyone is trying to find a new routine in the absence of its key person(s). Your chosen policy will have several different aspects, as listed below. These are the key considerations with any Business Life insurance plan.
Protection for Employees
Group Life Insurance is an option that some businesses may want to consider. This is where if an employee dies, a lump sum is paid to their estate to help their family relax and grieve without worrying about money.
It’s not an option for every business, as smaller ones may not find this cost-effective, but it is something that many employees and their families appreciate.
Protecting a Key Person
Covering a key person is especially vital for small businesses, as these companies rely on them for the bulk of the businesses profits and overseeing the day to day running of the business. If you lose your key person, the policy covers debt and protects against loss of profits. It covers the cost of hiring a replacement and can help strengthen relationships that might be damaged.
You can even select multiple key people for your policy, as certain business will have numerous key employees (directors, top salespeople etc.) but this will tend to cost extra each person you add.
Small businesses regularly cover their senior staff with Small Business Health Insurance but tend to overlook Key Person Insurance.
These members are also vital to your business, and if the shareholding director were to pass away, the insurance would provide the remaining shareholders with the funds needed to buy shares from the deceased director.
It’s designed to make this transaction as smooth as stress-free as possible during a distressing time, and there are several different shareholder policies for you to explore.
Keeping Business Loans Safe
The serious illness or death of your key person could mean that you get behind on business loans and other debts. This is where business life insurance comes in to help you out. The policy will work to secure your business against outstanding loans, as well as rent or mortgages. This will keep it afloat and means that any savings held by the business can remain untouched.
Hopefully, these are policies you will never have to use. However, knowing that it’s there means that you are given peace of mind should the worst happen. It keeps your company protected and ensures that everyone gets paid and can continue as normal.
About The Author
Founder and Director of Hooray Health & Protection, Charlie Cousins has enjoyed a career in the insurance and financial services industry spanning over the last ten years.