Whether as an executive or CEO of a large business, or as owner of one of the small businesses that are the backbone of this country, women are increasingly in charge of companies and increasingly needing to consider life insurance as a way to protect that for their families or their employees.
Business life insurance has always played a key role in business continuation. We’ll discuss three ways that women can ensure that the value of their business passes in the right direction in the case of an untimely death.
In a partnership, a buy/sell policy is the best way to ensure that both partners get what they want in the event of a premature death. If a partner dies, their portion of the company is owned by their estate. This leaves two options for the surviving partner. Either buy the deceased partner’s portion from the family, or consider that the family may either sell that part of the business to a third party, or become a part of the business.
In a buy/sell arrangement both partners (or however many there are) carry life insurance, in an amount equal to their portion of the business. If the unfortunate happens, the money is instantly available to buy out the partner’s family. The alternatives outlined above, third party sale or an unknown family member entering the business, are much to unpredictable not to insure against.
In the second scenario, a sole proprietorship, the business in many cases has virtually no value to the businesswoman or her family. The value in many businesses is the income. In this case, life insurance is all about loss of income. You have a job that just happens to be owned by you. If the business doesn’t have any inherent sales value, insure to replace income. Even if the company does have some sales value, rather than the loss of income driving a fire sale mentality, life insurance can calm the waters until the best value is attained.
Third is something we don’t see often, but life insurance can make the difference in making this scenario work for your employees. There are often situations where employees, or at least a key employee could continue a business on. In the absence of a family that wants to continue the business and in a situation where a person wants to see the business survive them, a policy to buy out the family and turn over ownership of the company to the employee or employees works very well.
Bottom line. Women are more of a force in business all the time at every level. Whether simply protecting loss of income or ensuring business continuation, business life insurance is the flexible tool for the job.