Life Insurance Can Protect Your Business

Many small business owners have their life savings invested in their businesses. In cases such as this, what happens when the owner dies? Does the business close? Must the family stand by and watch all their assets disappear? What happens may depend upon what you, as a small business owner, do to ensure the financial security of your family in the event of your death. Business life insurance can protect both your business and family and help provide for the financial survival of each.

Life insurance for business may be taken out for several different purposes. One purpose is to provide for the successful liquidation of your financial interest in the business for the benefit of your heirs. If you have a business partner, you should each have a life insurance policy, enabling an automatic buyout of the interest of the deceased. It protects the estate of the deceased, and ensures the continuation of the business.

If employees are scheduled to take over ownership after your death, an insurance policy can be designed to give them funds for the purchase of the business. If the business is to be sold outright after your death, working capital will be needed for the transition period. Funds may be needed to help tide the business over during this period. The availability of a ready source of cash will make the business that much easier to sell. Assets are usually discounted during such a sale and the availability of insurance funds will help the heirs.

Putting together a sound life insurance program to meet your business and family needs is difficult. You need the assistance of your insurance agent, attorney and family members. You must consider the interests of your family and heirs, as well as the legal aspects of this type of insurance. There may also be tax implications to the life insurance policy. Meet with a professional to discuss the level and type of life insurance that will best serve your needs.

If you would like to discuss business life insurance, business planning or business capital, contact the SCORE Association (Service Corps of Retired Executives). More than 12,000 volunteer, business counselors donate their time and expertise to assist entrepreneurs. SCORE is a nonprofit organization that provides free and confidential business counseling as a community service. For a referral to the SCORE chapter nearest you, call 1 (800) 634-0245.

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