When you’re a small business owner, you kind of have to think of everything, don’t you?
Of course, the fun things to think about are all the things that can go right. If and when your business takes off – and why wouldn’t it? – you’ll be your own boss! There’s no limit to the amount of money you could make. And, because you are your own boss, you get to set your own hours. And be responsible for the company culture. And hire people that you like and respect. Not to mention the work itself, which has the potential to be fulfilling and expansive and the culmination of your childhood hopes and dreams.
(That’s the top of the mountain, isn’t it?)
But as a small business owner, you also have to think of every thing that can go wrong.
We probably don’t have to go into much detail, here. You know full well what things can go wrong at your small business. Angry customers, supply chain issues, tech problems – there’s no limit to how things can go sideways when it’s your business, your ultimate responsibility.
Which is what brings us to life insurance.
After all, your job – as the owner – is to be prepared for every thing that can and could go wrong, isn’t it? What could go more wrong than your untimely death?
Fortunately, life insurance is built to be prepared for these scenarios. Whatever plan you put in place should be able to deal with even the most fringe of fringe cases. But none of that matters if you haven’t purchased it in the first place.
So let’s talk about it a bit more in-depth, shall we?
You are the “key person.”
The “key person” at a business is most often the business owner. It makes logical sense, doesn’t it? The owner, you, are the person who keeps most of the day-to-day minutiae of the business in your head. If tomorrow morning, we – your loyal employees, or customers – were to somehow find ourselves without you – what would we do?
That’s why “key person insurance” exists. It specifically is built to function as insurance against the worst-case scenario for any small business: the untimely loss of the person who matters most. You.
Key Person Insurance is a life insurance policy that pays out when a key owner/employee dies. The business itself purchases the policy and all the proceeds from the death benefit are also paid directly to the business. The main benefit of Key Person Insurance is that the cash the policy provides can be a bridge to the next necessary step in the business’ life—whether that is finding a key person replacement, selling the business or moving on to other projects.
Make sense? We thought so.
Keep that term in your head. Write it down if you have to. And let’s move on to the next thing you might want to deal with: buy-sell agreements.
An agreement to buy out your share of the business.
A fair number of you reading this may be saying, “Wait a second, I’m not the sole proprietor of my small business. I’m in a partnership!”
For those of us who operate in a partnership, we have something called a “buy-sell agreement.”
Buy-Sell Agreement. In the case that your business has more than one owner, then a Buy/Sell Agreement is another option to mitigate the risk of death of a key partner. Entrepreneurs can use life insurance to fund a Buy/Sell agreement. The cash benefit then allows the other owners to buy out the deceased partner’s interest from their remaining family members.
Ask yourself this: if you were to die today, would your family want to continue running your business?
The answer, most of the time, is a resounding “no.” That’s why a buy-sell agreement is so profound, and so powerful. It creates a framework to make it easy for the surviving partners of a business to buy out their deceased partner’s share of the business.
Convinced? We thought you’d be. It’s just common sense.
Let’s jump ahead to the next part: buying the insurance you need.
Lastly, let’s get insured.
According to the Small Business Administration (SBA), over 99% of America’s firms are small businesses. What does that mean? It means you are not alone. In fact, in the insurance business, we’re well versed in dealing with people who are in situations like your own.
Lastly, just so you have the full scope of options available to you, let’s take a look at the most simple one, which is simply buying (or expanding your existing) individual life insurance:
Individual Life Insurance. Covers your debts and responsibilities. If you die, your family would have financial relief from a cash benefit that could help close down or sell off your business if they don’t want to continue your work.
Sounds good, right? It doesn’t matter if you’re a freelancer, influencer or business owner, you owe it to yourself to protect everything you are working so hard to create. (Don’t try to fight it!)
We put our handy-dandy contact form below. Tell us your situation. We’ll look at what policies are a fit for your unique situation and report back as soon as possible.