In the excitement of starting a new business all the focus is generally onward and upward and the tendency is to kind of overlook the downside to success. This is more prevalent in partnerships, but is also a real problem for sole proprietors and corporations. Business life insurance can protect your family from losing the fruit of your labor and can also keep someone else from owning part of your business if a partner dies.
The obvious need for a business owner is to carry enough term insurance to make sure that all the debts of the business are taken care and don’t become a burden to your family. Most small businesses don’t have any real “market value”, so your heirs won’t really have anything to sell if you die prematurely. A life insurance policy can replace the lost income value of that business to your family.
In the case of a partnership it becomes more complicated. In most states if a partner in a business dies, their portion of the business is left to their heirs, their family. So you could go home one night and come back the next day with a new partner, one you may not want to work with at all or one that may not have any qualifications to work in the business. This problem is best solved by putting together a buy/sell agreement and funding it with buy/sell life insurance policies.
Then, in the case of an untimely death, the life insurance policy would provide the funds necessary to buy out your partner’s portion of the business. I know in my business I would much rather come in that morning and know that all of this was planned for and everyone will get what they need. Contact a good independent life insurance agent for quotes today on business life insurance.
This post is somewhat dated. Life insurance underwriting is changing and evolving continually. For more updated information check out some of the key word links. If you have a specific question or topic you need information for do a search. If you don’t find the answers you need contact me and we’ll make sure you get the information that is important to you.