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Who should have Business Insurance?
Business overhead expense insurance is designed for principals of closely held businesses or practices and owners of small businesses. It is most vital for businesses and practices in which the owner’s ability to generate income makes the difference between the office being open or closed for business—for example Store and Restaurant owners, Local small businesses.
How does life insurance protect your small business?
A life insurance policy on an SBO helps in a couple of ways to keep the business moving forward, even if the owner is no longer involved in day-to-day operations.
It enables other owners to execute a buy-sell agreement that ensures that, if a co-owner dies, the remaining owners have the capital required to buy the business. A buy-sell agreement details terms of ownership if owners leave, pass on, retire, or opt to sell their ownership stake. If the remaining business owners lack financial resources, that business can sink like a stone.
It’s important to routinely assess the value of the business and increase or decrease the amount of life insurance coverage each owner carries.
The founder and business owner may be the company’s most valuable asset – one that needs to be replaced quickly with an equally competent replacement. A life insurance policy on SBOs delivers flexibility and options to the remaining owners, the business itself, and of course, the employees who rely on that weekly paycheck.
How can I start creating an insurance portfolio?
Talk to your CPA and your insurance agent to determine just how much insurance each key employee should have to help protect the smooth operation of the company. It would also be wise to discuss this with your business banker if your company has outstanding business loans and mortgages. You should have enough insurance to make sure these loans can be paid off.
Discuss other business needs to develop a strategy to keep the business growing, even after the death of the company’s founder. The business is valuable to employees and other stakeholders. Your team of trusted professionals, including your banker, can help you navigate the difficult waters when there’s a death in the business.