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Although our website specialises in public liability, we are well aware that there are other forms of insurance available for small business owners.
In this guide we will look at some of the most popular forms of personal insurance held by business owners, and that is life insurance.
Life insurance is a fairly straightforward form of cover, but there are still a few things you should know about.
What Does it Cover?
In many ways life insurance is pretty self-explanatory, in that it simply covers you when you die.
There’s a little more to it however. Most life insurance policies will also payout if you are diagnosed with a terminal illness, and some include other benefits that are worth looking at.
Strategies for Business Owners
Most people take out life insurance for the sole purpose of protecting their family. This could be to repay the mortgage and other debts, to provide an ongoing income or simply to provide a financial buffer during a tough time.
For business owners there are more ways in which a life insurance policy can be used however. A good example of this is succession planning.
If your business partner was to pass away, what would happen to your business? In most cases their share of the business would be inherited by their wife/husband or even their children.
Would this be a good outcome for you and the business? Would the inheritor be able or even willing to work in the business? Could you see them as your new partner in a business you worked so hard to build?
Business owners can avoid this situation by using life insurance as part of an arrangement known as a ‘buy/sell agreement’.
The arrangement works by having life insurance policies in place for each partner which covers their ownership share of the business. If the person dies, the proceeds from the life insurance policy are paid to their estate in return for the person’s share of the business.
The deceased person’s share of the business is then redistributed amongst the remaining owners in accordance with the buy/sell agreement that had been put into place.
Life Insurance Cost
As is the case with other forms of insurance such as public liability, the cost of life insurance can vary greatly depending on a number of factors.
With life insurance the main factors impacting upon the cost of the cover include your age, gender, smoking status and the amount of cover you required.
The easiest way to determine the cost of your cover is to request a quote. Whilst we don’t have an online quote form available for life insurance, we do have financial advisers who we can refer you.
If you would like more information or a quote on your life insurance please call us on 1300 542 245 and we will refer you to one of our financial adviser partners.