Life Insurance for Business Owners

Life insurance is an important part of retirement and financial planning for most people and families. This helps to ensure our loved ones will be cared for, pay off the mortgage to allow families to live in their homes or pay for secondary education so the children can go to college without debt.

Many people use life insurance as an investment tool, obtain cash value, take withdrawals, and borrow funds. If you own your own business, you may be wondering the best way to protect your investment through life insurance.

Read on to learn more about life insurance for business owners. You can contact us at EINSURANCE for assistance purchasing your life insurance policy.

Life Insurance Is Important For Business Owners

It is even more important to have adequate life insurance when you are a business owner. Every business is different and has its own unique needs – and to protect them, life insurance is one of the most important types of insurance coverage you should have.

Some life insurance policies provide additional benefits that you can take advantage of, ranging from policy loans and withdrawals to guaranteeing third-party loans. Some policies act as investment vehicles and grow in value over time.

However, there may be tax consequences for withdrawing funds too early, so make sure you talk to your financial advisor or agent to understand how best to use the funds from your policy.

Why Do I Need Life Insurance as a Business Owner?

Life insurance plays an important role in protecting your business. If you have partners, part of your partnership agreement may require that you each have life insurance – this is to protect the partner in the event of your death. Each partner maintains their life insurance so the business remains protected.

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You may also want life insurance as a business owner so that your family is not burdened with supporting business operations. A life insurance policy can help protect them from using funds from your estate to run a business. This allows you to separate your professional and personal interests.

Types of Life Insurance Policies to Consider as a Business Owner

There are three types of life insurance policies to consider. Each has a place in your financial planning, so talk to your agent for further assistance in deciding which type of life insurance you should consider as a business owner.

Lifetime Life Insurance

Life insurance for life, sometimes also called permanent life insurance or straight life insurance, is a permanent policy with a fixed premium throughout the life of the policy. Lifetime policies are valuable because they also accumulate cash value for as long as you own the policy. We can help you with whole life insurance quotes.

Universal Life Insurance

Universal life insurance is a form of permanent life insurance. Coverage builds cash value and lasts a lifetime, as long as you continue to pay your premiums. The cost of your policy is covered by the premium, which also earns interest over time. Finally, the accumulated value of the policy exceeds the cost of the policy (death and policy administration costs).

Term Life Insurance

Term life insurance is an approachable way to purchase life insurance – it is a basic policy where you can decide on the length of time as well as the amount of coverage you wish to purchase. When the term of your policy expires, you stop paying and you stop receiving coverage. If you survive the policy term, there is no death benefit payment. A number of term policy can be converted to a permanent one based on a variety of conditions – check with your agent if you have a futures policy you’d like to see about conversions.

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There are two types of term insurance that you can purchase – rate term and decline term. Tiered terms are the most popular and refer to term policies that pay the same amount of death benefit if death occurs at any time during the term of the policy. A reduced term policy has a death benefit that decreases over time the policy is in effect.

Some carriers offer an additional option called “premium return“. This means that if no claims are made during the term – and other conditions are met – the premium can be returned to the policyholder. The carrier will charge higher rates and often impose conditions, such as the policyholder keeping the policy in effect until the term expires.

How to Buy Life Insurance as a Business Owner?

Talk with your business partners and your family about your life insurance needs and how best to protect your business interests. We can help when it comes time to review life insurance options and decide between term and permanent policies and the amount of coverage you may need to have.

Buying life insurance is an important decision so make sure you have an agent at every step to compare offers and explain terms and conditions. We will make it easy for you to find the best life insurance for your needs as a business owner.

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