As a business owner you’ve worked hard to establish your business and achieve success. It makes sense to protect what you’ve worked hard to achieve with insurance to safeguard you against undue risk. Business insurance is a risk management tool that enables businesses to transfer the risk of a loss to an insurance company. By paying a premium to the insurance company, your business can protect itself against the possibility of sustaining a much larger financial loss.
Business Continuation and Key Employees
Employees are an integral part of a business’ success. Often an employee has special talents or knowledge essential to the operation and success of the business. As a result, many businesses now insure the lives of key employees. Small businesses can protect themselves against the loss of a key person in a number of ways. One is to institute a buy-sell agreement.
As a business owner, you can use life insurance to fund a buy-sell agreement so the principals of your company can continue operating the business, satisfying the needs of employees, creditors, and surviving partners or shareholders, and the survivors of the deceased. An insured buy-sell agreement (agreement funded with life insurance on the participating owners’ lives) may be recommended by your financial planner to ensure the buy-sell arrangement is well-funded, and also to guarantee there will be money if the buy-sell event is triggered.
Key Employees Insurance
Key employees have several characteristics that distinguish them from other employees, including:
• Having specialized skills that are critical to the success of the business;
• Having a significant client base that might leave the business if the employee were to die.
When a key employee dies, the business needs cash:
• to cover the expense of finding, attracting, and training a new employee;
• to continue the long-range development programs;
• to assure creditors and customers the business will continue.
By implementing Key Employees Insurance, the employer would be the owner and beneficiary of an insurance policy. The key employee would be the life insured, but would receive no benefit from the existence of the policy. The policy can then be used to finance any loss in business while the key person is replaced.
Critical Illness Insurance
If a business owner becomes critically ill, the financial impact on their savings and lifestyle could be disastrous. For the self-employed or new business owner, the lack of an employee health and dental plan can leave them exposed to unplanned expenses. Living benefits products can help mitigate these risks. Critical illness insurance is designed to help with the costs associated with recovering from a critical illness so they may focus on getting better.
The peace of mind that income protection can provide is available for professionals, business owners, business executives, and full-time, part-time or home-based workers. Whether you need to secure your main source of income or to supplement the coverage your employees receive through their benefit package, our Insurance Advisors can help by providing a comprehensive and portable plan you can rely on throughout your working years.
Our Insurance Advisors are here to help recommend solutions. To learn more, please contact an Insurance Advisor today.
Strategies that involve the use of insurance and related products and services are offered by licensed representatives operating through our sister firm Burgeonvest Insurance Corporation.