As a new business owner, you would need to secure the financial stability of not just your loved ones but your business venture as well. With adequate life insurance cover, the future of your business venture will remain secure even in the face of an untimely circumstance like your demise, or demise of a fellow owner or a key employee.
While your own life insurance plan protects you from loan liabilities and ensures the financial security of your family, life insurance for your new business can be structured in a manner to protect your business in the unfortunate event of death or disability of a key employee or co-owner. It may also be used to buy out shareholders or partners in a buy/sell agreement if there has been an unexpected demise of an owner of the business.
Here are some important things to take into consideration when you invest in a life insurance plan as a business owner.
Things to Consider
Reliance Life Insurance offers you the flexibility to choose an insurance plan that is suited to your needs, goals and aspirations. Before you decide what type of cover would suit your needs, you need to consider the following key factors:
- Your family – Your family's interests should always be your very first priority, and safeguarding them - your biggest responsibility. Investing through life insurance plan not only safeguards family against any loan liabilities and financial obligations that you may have incurred in your business. It also secures their future in the unfortunate event of your demise. Once you have secured your family against the untimely event of your death, you also need to secure your living future after your retirement, so that you and your family can continue to enjoy the lifestyle you currently have, live life independently on your own terms, as well as transfer your legacy to family members.
- Your business – You need to safe-guard your company in the unfortunate event of the demise of a partner, co-owner or a key employee. If planned well, you can secure the sustenance of your business venture. Life insurance plans offer surviving business partners enough capital to buy the business assets of the deceased partner. It also helps sustain their business until a replacement is hired, thereby securing the longevity of the business.
Types of Plans that can help
Your insurance needs as a small business owner are unique. Reliance Life Insurance plans have been designed keeping your needs, goals and aspirations in mind, to provide you with solutions that will secure your business in times of uncertainty.
- Term life insurance – Term policies offer you comprehensive and affordable coverage and safeguard your business against unforeseen events such as loss of income and outstanding loans. It is a great option for business owners who have partners that may be retiring in the near future. If you, your partner or a key employee have a mutual understanding that if either one passes away before their retirement, the surviving partner would purchase the deceased's half of the business. To make this possible, each one of you can invest in Reliance Life Insurance Term Plan, nominating the other partner or key employee as the beneficiary.
- Whole life insurance – Whole life insurance plans offer dual benefits of life cover as well as returns. Whole life insurance is different from Term insurance. Term plans generally offer you insurance cover only for a certain period but no benefit on maturity. In certain whole life insurance plans, such as participating whole life plans, a certain portion of the premium amount you pay goes towards building the life insurance cover element, whereas another portion of the premium amount is invested. After paying the minimum due premiums as required under the plan, if the policy lapses, you still have the liberty of walking away with your investment account.
These plans are ideal for business investors who want a long term insurance cover, short term or a specific period of time. As a business owner, in the unfortunate event of your demise, your beneficiary will receive both the death benefit as well as the monetary value accrued under the plan. This kind of insurance can also be used by the surviving partner to buy part of the business owned by the deceased partner.
How much to buy?
The amount of insurance your family and business requires depends on many factors such as the structure of your business, your expected income over your lifetime, future expenses and debts. Try our Insurance Need Calculator for more guidance.