The Importance of Life Insurance for a Businessman- Explained!
Businessmen or entrepreneurs are truly risk-takers. They do intensive research and prepare business plans by working all day night. They also plan several business strategies in order to sustain keeping all kinds of contingencies in their mind.
But, we all know that life is unpredictable.
Thorough market research, meeting with different investors, product development, and business strategies are all seem good and apt.
But what about the life uncertainties that can occur anytime without prior notice?
In the absence of apt life insurance protection, unforeseen events can turn things upside down. An untimely demise or suffering from a total permanent disability of a business owner, co-founder, or any key person of that business may proof as a big loss for that business and also could end it all.
Not only this, but it may also increase the financial burden of your family members who are solely dependent on you. And of course, your business will be like a wrecked plane without you as its pilot. Unfortunately, it could end in mass layoffs, bankruptcy, and failure of your dream business.
Be a Responsible & Sensible Entrepreneur: Cover Life Uncertainties As Well
There are several traditional businessmen, young entrepreneurs, and individuals that have not opted for a life insurance plan, till yet. It simply indicates that all such people do not have any clue about the importance of life insurance. Unfortunately, they are not considering all the uncertain risks which are associated with starting or running any business. In addition to the risk that life comes with.
Well, an adequate life insurance policy offers financial protection in an event of uncertain eventualities.
As a businessman, you should answer the given below questions, if you think there is no importance of life insurance in your life:
- If, in case, you as a business owner suffers from a critical illness or a total permanent disability then who will take the ownership in order to run the business successfully even in your absence? Who will be responsible for the monthly expenses or cash flow of their family?
- What if a business owner meets an untimely demise, who will handle the business and provide the family members much-needed financial support?
In such unforeseen events, who will give support to the business, employees, and family members?
Do not put your loved ones, business owners, stakeholders, investors at a risk.
Buy an adequate life insurance cover for yourself as well as for the key people of the company/business.
So now you know the importance of life insurance in any business owner’s life. The next question that would come into your mind, what type of life insurance plans should you opt for as an entrepreneur?
To know the answer, continue reading further.
What Type of Life Insurance Policy Should A Businessman Opt For?
A life insurance policy is one of the most important types of insurance that covers an untimely demise. It basically takes care of all financial losses and liabilities that any business may have to confront because of the demise of the business owner. An apt life insurance plan not only provides financial protection to the key people of your business but also offers financial support to your dependents in your absence.
But what type of life insurance plan covers all at the lowest premium?
And it is none other than a pure life cover which is commonly known as a TERM LIFE INSURANCE.
A term insurance plan is a type of life insurance policy take takes care of all the unfortunate events that may put the business and family members into financial distress. The insurer will provide the sum assured as a death benefit to the nominees in an event of the untimely demise of the policyholder.
The best thing about this type of life insurance plan is it is affordable when compared to other type of life insurance plan. But it offers comprehensive coverage at an affordable premium.
How A Term Life Insurance Will Help You As a Businessman?
You know already that life is uncertain and any unfortunate event because of the loss of a key partner or sole breadwinner of a family may cause financial stress. Term life insurance plan will assist you to recover financially so that your business does not have to suffer at any point. And so does the loved ones of the policyholder.
A term plan offers a high amount of coverage at an affordable premium. It also covers total permanent disability. However, you can also enhance the basic coverage of your existing term insurance plan by opting for riders or covers such as critical illness cover, waiver of premium, accidental death rider etc. All you need to pay an extra premium for availing these benefits.
In an event of tragic events, a term insurance plan will:
- Offer financial protection to the family members of a business owner.
- Help in repaying any mortgage or debts that have been taken to start & run the business
- Help in meeting the basic financial needs of family members.
Now Have a Look at a Brief Explanation of Keyman Insurance Policy
All the life insurance companies offer a Keyman Life Insurance Policy.
When you purchase this type of insurance plan, the premium is basically paid from the company’s account and an unforeseen event of untimely demise, the company gets the coverage amount from the life insurance company.
So, you can purchase this type of life insurance policy for key individuals of company such as co-founders, stakeholders, and other key people who play the main role in running your business successfully even in your absence.
In fact, you must opt for the Keyman Life Insurance Plan for all the key people of the organization because their loss will result in huge financial stress. In addition to this, the cover can be used in order to find & train the replacement of the keyman.
And also note that, if that key individual holds the company’s stock then his/her family members would legally own all these stock after his/her demise. Now, the company may want to buy these shares or stocks from the deceased’s family members. There are chances these funds can be used by the key person’s family in times of their financial needs. In such a case, the company can purchase these stocks or shares from the sum assured received upon filing a death claim of a key person. Without the keyman life insurance policy, the company would have to put the money from the company’s fund in order to purchase these stocks or shares.
So, when you buy a term life insurance and Keyman Insurance Plan it ensures:
- That there is insurance for a business owner’s family that would take care of all their financial needs post his/her demise.
- That the business/company has sufficient funds in order to find someone else as a replacement of a keyman after an unfortunate event of his/her sudden demise.
- That it assists the company to purchase all stocks/shares back from the family of a keyman after his/her untimely demise.
Now, what to do next?
You just need to evaluate.
Well, yes, you read it right. Business owners just need to evaluate their needs before purchasing a life insurance plan.
Important Things to Keep in Mind before Purchasing Life Insurance as a Businessman
The following are some of the important things that you need to keep in mind when buying a life insurance plan in order to make a well-informed decision.
1. You Must Know For Whom You Should Buy A Life Insurance Plan.
As a business owner,
- Opt for a life cover for yourself.
- Opt for keyman life insurance plans for yourself as well as for all those key people such as co-founders, stakeholders, who are important for the growth of your company.
2. Consider the Loan Amount You Have
Well, the majority of the business owners/ entrepreneurs opt for a loan in order to start a new business.
So, before you decide a sum assured i.e. the life insurance coverage, you must consider the loan amount that you have already taken for starting your business. In this manner, you as a businessman are making sure that your loved one’s do not end up paying off your loan amount throughout their life or bear the financial burden in an event of your untimely demise. In addition to this, you are ensuring that your business does not fail due to financial loss.
When you are covered under an apt life insurance plan, the repayment of the loan will be made from the coverage of your life insurance policy. So, always ensure the amount of the loan is taken into account while assessing the sum assured.
3. You Should Purchase an Apt Life Insurance Plan
Most of the people are not pretty sure about how much life insurance they should opt for. Well, an individual must consider the sum assured amount that would be enough for his/her family members to meet their various financial needs after his/her demise. In that case, it is suggested to buy at least 15-20 times the yearly income.
And if you are buying Keyman Life Insurance Plans then you should consider the sum assured amount that will help the company to run continuously without confronting any sort of financial burden. However, if you are still getting confused then it would be a great idea to seek an advice from a financial expert who will guide you in the same. Because it is better to take advice than opting for a wrong life insurance policy and coverage that does not meet your financial needs at all.
I believe now you, as a businessman or entrepreneur have understood the importance of life insurance. So, buy an apt life insurance cover by keeping the aforementioned things in mind in order to provide absolute peace of mind to your loved ones as well as to company stakeholders and other key people who are important for the growth of your company.