Get The Basics Of Business Life Insurance

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Business Life Insurance. As a small business owner you had a dream to own and successfully operate your own business. After the ups and downs and a tough learning process you experience these dreams develop into an extremely profitable enterprise. Your desire is to see the success continue. How do you guarantee this? What actions do you need to take to assure this reality? What key aspects of your business do you need to take a serious look at? It all boils down to proper planning.

It takes a unique type of person to make a business successful and to effectively assure its continuation. Planning for death, retirement or disability are things we just must take the time to do. Ignoring these things could be a costly mistake. It is good common sense to have a business life insurance expert work with you when looking into these things.

Key Employee And Business Life Insurance

The Key Employee is usually the backbone of the small business. The Key Employee is in many cases the business owner himself. The premature death of this person can be very costly to the business. Proper life insurance can offset these costs thereby allowing the business to comfortably readjust.

The Sole Proprietorship And Business Life Insurance

The owner of a Sole Proprietorship is not a separate entity from the business. The Sole Proprietorship and the business owner are one in the same. Whatever liabilities the business incurs so does the owner. When the owner dies so does the business. Although the assets of the business can legally be transferred to a beneficiary upon the death of the owner the business has to be dissolved. The new owner has to start a new business in his or her name. The transition period can be costly. With careful planning and adequate life insurance, however, the business can continue without much problems.

The Partnership And Business Life Insurance

Two or more people get together to form a Partnership. Unlike the Sole Proprietorship the Partnership is a separate entity. In the event of the death of one of the partners the share of the deceased partner is of immediate concern. In order to avoid a problem in this type of situation the partners have a Buy-Sell agreement drawn up. This agreement...

• Creates a guaranteed and binding market for the deceased partners share.
• Allows the surviving partners to continue the business without interference.
• Provide immediate cash for the survivors of the deceased partner thereby eliminating possible financial problems.

Business Life Insurance For S Corporations, C Corporations And Limited Liability Companies.

The S Corporation, C Corporation and Limited Liability Companies are separate entities with separate lives. The corporation is a conduit that passes gains and losses to it's owners or shareholders. A Buy-Sell agreement should be drawn up similar to that of the partnership. It would be funded by life insurance as that would be the least costly for the corporation. Upon the death of one of the shareholders the proceeds of the policy would be paid to the corporation which would in turn purchase the deceased shares from his or her survivors. This transaction is of great advantage to the heirs as well as the corporation.

• Creates immediate liquid cash for the heirs of the deceased shareholder. The insurance company can pay this money in a lump sum or in the form of a monthly income thus creating continuation of income.
• Leaves the corporation completely in the hands of the surviving shareholder without any interference from the heirs of the deceased shareholder.
• Created a guaranteed market for the shares of the deceased stockholder at a fair price.

A good understanding of business life insurance can save the small business owner devastating problems. I have attempted here to give you a brief look at how it works. It may be wise to get the expert advice of a professional in this area if business life insurance is not an area of your expertise.