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A Guide To The Best Business Life Insurance For You

This post was written by Dylan Kohlstadt

If you own a business, you must protect your assets. Making sure that your loved ones are taken care of is essential, but you also need to ensure your business keeps running smoothly in the event of a tragedy.

A Guide To The Best Business Life Insurance For You

Life is unpredictable. Risk follows us whether we’re at the office in a board meeting or spending time with family at home. When it’s a matter of life or death, it’s a wise idea to prepare. Life insurance is a rather morbid topic, but it could also be the missing piece in your financial portfolio. 

With the right kind of coverage, business owners can preemptively act in their business’s best interests; individual employees and the company can receive financial support for unexpected emergencies. Depending on how policies are structured, your coverage plays an integral part in allowing your business to operate smoothly. In fact, the 2022 Insurance Barometer Study reports that 68% of life insurance owners say they feel financially secure.

But contracts are binding, and they can be tricky to navigate. You don’t want to get caught out. Here is a guide to life insurance, its benefits, and choosing the right coverage as a business executive:

Five Benefits of Business Life Insurance

As a business owner or executive, you need to trust the company and the life insurance policy you’ve chosen. The right cover can help to pay off business debts, supplement cash flow, and cover unexpected expenses in the event of your death.

Additional benefits of business life insurance include:

One: Guarantee Continuity After Your Death

Business life insurance allows you and your business partner (or partners) to buy out each other’s business shares should one of you pass away. This coverage enables the business to continue running without disruptions.

Business life insurance also takes the pressure off your family members during an emotionally taxing time. Instead of worrying about your business, your loved ones can grieve, care for each other, and establish a sense of continuity in their lives. 

With the right policy, your beneficiaries can receive a “death benefit” payout. This payout ensures that your loved ones are financially secure. 

Data from LIMRA reveals the following are the most common reasons that Americans buy life insurance:

  • Paying for burial and other end-of-life expenses (83%).
  • Supplementing lost income from the death of primary wage earner (68%).
  • Transferring wealth from one generation to the next (63%).

Two: Tax-Free

Death benefit payouts are mostly tax-free, which is a significant advantage of life insurance. Specific policies are also tailored to ensure that transferring money to heirs has fewer financial liabilities.

Three: Debt Protection

When you take out a loan, lenders often demand reassurance that there is some form of collateral in case your company cannot repay the loan due to unforeseen circumstances. In these instances, life insurance coverage pays off debts and gives you security so lenders can confidently approve your company’s financing.

Four: Equalise Your Estate

Life insurance guarantees that inheritance is equally distributed. For example, if one of your children would benefit more from inheriting business shares and another would gain more from a financial payout, your insurance company can balance and will deal with this accordingly.

Five: Cover Your Assets

Sometimes, business operations result in injuries to others. Liability insurance extends to any bodily injuries caused in these situations and protects the company and its reputation. Liability insurance also covers accidental damage to another person’s property.

What Happens If I Don’t Take Out Life Insurance?

What are the consequences of not taking out a life insurance plan? Yes, insurance has a reputation for being admin-heavy, time-consuming, and stressful. When it comes to life insurance specifically, you’re actively paying your hard-earned money towards a financial contract from which you’ll never personally reap the rewards. 

However, the consequences of not having a plan can be severe. Without life insurance, you may leave your family members in a financial crisis, with debts they cannot pay and no clear way to move forward. Your business could end up suffering and may be liquidated altogether if you’re the sole proprietor. 

In addition, you could face the following challenges without life insurance: 

  • Law violations. Lacking certain types of coverage, like workers’ compensation, violates the law and could result in legal repercussions as extreme as imprisonment.
  • Sabotages client relationships. Clients are less likely to consider your business reliable if you don’t have professional liability. In some instances, depending on the nature of your business, errors and omissions coverage is a non-negotiable legal requirement.
  • Financial loss. Contract and work disputes, sexual harassment allegations, wrongful termination accusations, and other issues can incur a high cost without insurance coverage. These personal issues could also ruin your reputation and take your business down.

How To Choose The Best Life Insurance Coverage

We recommend that you consider the details of the policy and the reliability of the provider when you choose your life insurance coverage. When exploring your options, remember that life insurance coverage comes from a financial contract, a commitment, and a long-term investment. When deciding how you want your assets to be managed and distributed and whom you want to take charge of this process, here are two things to consider:

Compare Multiple Life insurance Companies

Look for recommendations and online reviews, and compare life insurance policies with similar benefits from various companies. You may find that larger, well-established businesses charge more for less, which is disadvantageous for you in the long run. Before committing to a particular company, do your research and see what the general experience of the company has been for other people. Reading reviews reflects a company’s reliability more than any advertising campaign. If a company has a good client satisfaction record, chances are you, and your company will be in good hands. Pro Tip: Beware of the internet. People tend to be sneaky. Be wary if a review sounds forced, robotic, or too good to be true. These days, companies pay good money to have fabricated reviews posted online and increase interest in their business.

Interview The Company

Keep in mind that the contract you sign is legally binding. Although insurance providers are governed by regulations and are required to fulfil their commitments, you are also responsible. Interview your company of choice provider who understands your needs personally, and you can ensure that the policy is in your best interests. There are many life insurance policy options available. It can be challenging to discern between scams and what truly benefits you and your business. It’s best to be thorough when determining what life insurance coverage policies are best for you. If you approach the process cautiously and evaluate your options, you’re more likely to make a wise decision.

What Are The Different Types of Life Insurance?

The finer details of the life insurance policies should be discussed with an insurance agent or company.However, here is an overview of several types of insurance for you to consider:

Whole Life Insurance

Whole life insurance is a permanent type of life insurance, providing death benefit coverage cash payouts to the family of the deceased and other listed beneficiaries. Whole life insurance policies act as a contingency plan for businesses in the event of losing a key employee or partner.

Term Life Insurance

Term life insurance refers to when the insured individual passes away within a predetermined term, and the beneficiaries will get the stated death benefit.  These policies do not extend beyond the guaranteed death benefit and feature a no-savings component, otherwise found in a whole life insurance product.

Universal Life Insurance

Universal life insurance is another form of permanent life insurance, with an investment savings element and low premiums. However, unlike whole life insurance with fixed premiums, the cost of universal life insurance increases to how much coverage it would have to provide in the event of death.

Variable Life Insurance

Variable life insurance policies are another kind of permanent insurance but are considered more volatile than the others. This policy has a cash-value account divided between several sub-accounts available in the policy. The insurance policy’s cash value fluctuates as the underlying investments increase or decrease, meaning that your payout varies depending on how much money is in the relevant accounts.

Burial Insurance/Funeral Insurance

Funeral insurance explicitly covers the cost of the deceased’s burial as a financial payment at the time of death. This ensures that unexpected expenses are covered, giving family members and loved ones time to grieve without stressing the financial implications.

Survivorship Life Insurance

Survivorship life insurance covers two people, and the death benefit is only paid out after the deaths of both insured parties. Couples frequently invest in survivorship life insurance to fund a support system for their children. This may include lifetime care, estate planning, leaving a sizable legacy, and other benefits.

Mortgage Life Insurance

In the case of the borrower’s passing, a mortgage life insurance policy is a term life insurance plan created expressly to pay off mortgage obligations and related expenses. However, a mortgage life insurance policy will not pay out unless the beneficiary is the mortgage lender and the borrower passes away while the mortgage is still in effect.

Take Action To Secure Your Future With Life Insurance

Insurance companies will thoroughly evaluate your health and the risks associated with the contractual agreement to provide you with the best life insurance plan. When you sign the contract, the state of your health will determine how much your premiums cost and what kind of coverage is accessible to you.

Younger, healthier people typically have the lowest insurance premiums. You can expect to pay more if you have pre-existing health issues or lead a hazardous lifestyle, which is one of the many reasons why life insurance should be procured sooner rather than later. 

Yooma Life Insurance provides an easy-to-use and customisable life insurance policy administration system to make it easy for you to access, edit, and communicate with your insurance broker about your preferred coverage.

Please consult us if you think we can help make your life easier now while helping you secure a better future.

Contact Yooma Life Insurance today.


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