If you own a business, you've probably wondered what will happen to your family and your business when you are not around. Life insurance can help your family and your business in several important ways:
It can provide funds to ensure that your business continues operating as usual and keeps your family financially stable after your passing
It can provide your business partner the opportunity to buy out your portion of the business and provide your family the funds to continue living at the same standard of living
You can provide for your family with an individual policy and still purchase a policy to protect your business as well. There is flexibility and options available to you
So what are the various types of life insurance policy options available to protect you and your business?
Individual Life Insurance
Individual life insurance allows a policy to be purchased with an individual named as beneficiary on the policy. You may purchase a life insurance policy with your business partner named as beneficiary to provide funds to continue business operations after you pass. Individual life policies can also be purchased with your family listed as beneficiaries to ensure they continue to receive income and aren't interrupted financially after you pass.
For this policy type, it is typical for the business partners to take out policies on each other to ensure that business operations are not interrupted, as well as purchasing separate policies with their family listed as beneficiaries.
Key Person Life Insurance
In a key person life insurance situation, a policy is purchased on an essential employee, such as a business owner, with the business listed as the beneficiary. Purchasing a policy of this type ensures that the funds are paid directly into the business and will allow time for adjustments to be made to continue the business operations as usual.
The key benefit to purchasing this type of policy instead of an individual life policy is that the policy is generally paid through the business and the funds are to be paid directly into the business itself.
Life insurance can be used to fund a buy-sell agreement. In this situation, business partners take out a life insurance policy that will allow the surviving business partner to buy out the share of the deceased business partner. In this situation, it protects the surviving business partner from the family of the deceased partner trying to claim a portion of the business, and also provides the family funds to continue living uninterrupted through the purchase of the partner's share.
If you own a business and want to make sure that operations continue as normal after you are gone, life insurance can help provide the funds necessary to keep your family and business protected. Call us at (602)337-2723 or click the button below to discuss your options and find a life insurance policy that fits you and your needs!