Most people start a business to improve the quality of their lives, those of their loved ones, and even employees. However, running a company comes with inherent risks because the owner or other key employees can pass away, leaving a big gap to fill. These are the beginning of some very good reasons to take out life insurance.
For example, imagine that this really does happen. Are those left behind capable of the necessary leadership to keep your business afloat? How will your loved ones pay off any debt your business owes?
This is why it makes sense to take out life insurance for your business. Besides providing the financial support necessary to keep the business running, this helps your business pay rent and other office expenses. Those left behind can also use the payout to finance hiring and training someone to take over the business operations.
Notwithstanding the grim possibilities that could happen to your business, life insurance could also give you a silver lining in attracting top talents as you search and expand your human resources. Highly talented and skilled applicants are attracted to companies that value the future of their employees and enterprise.
If you are yet to decide whether or not to purchase life insurance, we invite you to continue reading for six reasons to take out life insurance when running a business.
Are You Running A Business? Here Are Six Reasons To Take Out Life Insurance.
1. Ensure business survival and continuity.
If your co-owners or a key employee fall critically ill or pass away, it can affect how the business runs. A life insurance policy can help the surviving partner to keep the business running while looking for a replacement. Also, depending on the estate plan of the business and how the owners wish their assets to be distributed, life insurance can make it easier for the other partner to buy the portion owned by the deceased partner.
It would be a catastrophe to abandon a company with great possibilities just because there’s no fund left to continue its operation. Part of the strategic planning of any successful business is ensuring longevity and continuity – life insurance will be able to help with that.
2. Save your company from bankruptcy.
Life insurance is an excellent option for an entrepreneur who wants the company to succeed even after they’re long gone. Without the required finances, at some point, your business is likely to become bankrupt. You can customize your life insurance policy according to the specific situation so that the business doesn’t close its doors due to a critical illness to you or someone crucial in its operations.
Many companies that use heavy equipment and machinery are usually inundated with repair and replacement expenses. Instead of letting this happen all the time, companies acquire tool insurance. The cost of repairing and replacing pieces of machinery and equipment over time limits the revenue of any business, and it would be optimal if they will be insured.
3. Help with debts payment.
You already know that every business needs financing or will need it. You may have to take out loans backed by your assets to start or grow the business. In such cases, your lender may give you the option to use life insurance as collateral to repay the loan in the event you pass away. This way, the death benefits will go to the lender, while any remaining proceeds will go to your beneficiaries.
4. To replace employees.
If an insured key employee leaves the company on really short notice, the business will likely need time to get a replacement. It’s possible some things might not run smoothly without them, thereby resulting in losses.
Life insurance can mitigate this cost and enable you to run your operations without affecting the profit margins. You can also use the fund to cater for the expenses the employee handled. Also, if an insured employee leaves, some insurers allow the transfer of the policy to the incoming employee which saves on money for the company.
5. Provide instant cash when you need it.
Let’s say you need to complete an order for a loyal client, but you’re short on funds. A life insurance policy can allow you to borrow a quick loan while using the policy as collateral. However, you should only borrow from your life insurance if you’re completely sure that the reason you’re borrowing will pay for itself in full after delivering to the client.
The possibility of growing and expanding your business can become a reality. Should you need to invest for any upgrade on your business, you will be able to accomplish it, and it would be just a phone call away.
6. To protect your brand image.
Brand image is one of the most valuable assets of any business, yet one of the most vulnerable. Suppose you or a key employee retired from making decisions in the company, the business can incur losses until an appropriate replacement is found.
Protecting your brand image is crucial as you have strived so hard over the years to build and strengthen it. Even in the event of a major loss, it’s necessary to keep the brand strong to ensure that it can go through these challenging times.
Your life insurance cover can ensure the protection of the brand image by providing enough finances to keep things flowing until they find the ideal replacement. Keeping the reputation strong increases customer and employee loyalty, which allows the organization to command premium prices on their products even during a crisis.
When the phrase “life insurance” comes to mind, most of us only think of protecting our spouse and children, but what about your business? Whether it’s a startup or an established business, taking out a life insurance policy for your company should be a priority.
Nothing in life is certain. Anything could happen, and a moment of hesitation often leads to loss and tragedy. But not all situations can be left as such. That’s why providing security and assurance to your family and the people who depend on you is crucial.
A key benefit of life insurance is protecting the future of your business and family. This offers much-needed peace of mind that you always have a backup if your business faces hard times. What makes you hesitant to take out a life insurance policy? If you have any questions or suggestions, we love to hear from you in the comments below. Also below are links to more fantastic articles about ALL things DESIGN for your home or business.
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