Life insurance is a concept discussed in every household since it has a close relationship with personal finance. Many individuals consider it necessary for educational or funeral expenses, debt coverage and tax-free benefits, mortgage payments and care for dependents, among others. We can almost state that life insurance is universally applicable, even in the corporate environment, even though some business owners still view it with confusion and skepticism, probably because of its complexity. Consequently, this article ahs the purpose to provide accurate and useful information for all those small business owners who treat the importance of having life insurance with indifference. We do not blame them; they probably heard the most common myths associated with this type of insurance for business owners. We are talking about misconceptions like opting for term insurance is all you have to do; only large companies truly need life insurance and only the person actually owning the company should get compare whole life insurance quotes. Well, the time has come to leave aside these untruths creating even more confusion in your mind.
How business owners benefit from life insurance
Life insurance can help your small business tremendously if you know how to use it properly and we have to admit, if the business’ income ensures the survival of your family or none of the members is ready to take over after your death, then it will come very handy because you can ensure them a good living, whether you are physically by their side or not. Shortly, a life insurance will help your family pay off potential business debts accumulated during your lifetime or cover their basic necessities when you are gone. However, keep in mind that you are not the only important person within the company. For instance, if you could never manage without the contribution of your highly trained and most experienced employees, then you should consider purchasing a life insurance for him or her. We are talking about your key person that your small business cannot function properly, not about any ordinary employee that you can replace if the situation calls for it.
Other business uses for life insurance
Nevertheless, there are just two uses for life insurance. If you own a business, you can do a lot more to protect it. For instance, you can resort to life insurance for recruitment, cash accumulation, financing or liquidation prevention. Starting with recruitment, life insurance represents a competitive advantage because it helps you to lure more candidates by including it to the benefits package. Such an appealing offer will take good employees from right under their noses. In what concerns cash accumulation, by buying a cash-accumulation policy, you benefit from additional funds that you can use to expand or handle a financial emergency. When it comes to financing, this is common sense, but since you own a small business that just made its appearance on the market, you need to obtain financing from banks, which might require you to purchase life insurance and use it as a collateral. The liquidation prevention mainly refers to the situations described in the previous paragraph.