The Most Often Missed Component of Small Business Insurance

At some point in time, you took a risk and started a small business.  Through many lean moments, long hours, and perseverance, your business is growing.  You’ve added some employees and now can actually take a vacation again with the family.  But is everything really in good shape?  Could you have missed one of the most serious components of insurance planning, life insurance?

A fact of life is people die, even successful small, medium, and large business owners.  Another real and sad fact is these business owners never thought about what would happen to their business, their employees, and their families if they did.  In fact, they mistakenly believe the business will take care of their family and itself when the reality is that many, many businesses just die along with the owner because of a lack of planning.

You have a lease or a mortgage, capital loans, payroll and other obligations which need to be paid. Do you know what your creditors will actually do should you pass away? You may have some personal life insurance for your family but can your estate be held liable for expenses owed by your business?  Do you have partners or investors in your business?  If you die, can your spouse assume your role in the company?  How quickly?  What will stop your employees from jumping ship and taking clients and even assets with them?  These are scenarios and conversations you need to have now with your insurance professional, attorney, business partners and immediate family.

Every business needs a continuity plan in place funded by life insurance for the owners and investors.  A ‘Buy –Sell Agreement” in place will insure your spouse and family are taken care of and your business will have a far better chance of succeeding.  The Buy-Sell Agreement will purchase the value of your ownership from your spouse while allowing the remaining partners to focus on the day to day operation of the business.  If you’re a sole proprietor, a succession plan will essentially work the same way.  Insuring the obligations are met and your family taken care of through life insurance.  In addition, disability insurance as part of this plan needs to be discussed.  A conversation about key-man insurance is also necessary to help protect the business.

Sit down and have the difficult discussion of developing a succession plan and strategy to put into place in the event of a premature death.  Your licensed insurance professional can show you various scenarios and how to have adequate funds through life insurance to finance these options.

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