By Kendra Madsen

There are a lot of things that go into running your own business, from securing your finances, to hiring the right employees, to providing excellent customer service. Throughout your life’s journey, you may have already considered your life insurance needs as a parent or spouse, but have you considered your life insurance needs as a business owner? Here are some things to consider about purchasing life insurance as a small business owner.

Your family

You have worked hard and made many sacrifices to start your own business and you have likely incurred some debt to get started. While you may have a plan to pay back that debt over time as your business grows and to make all of the sacrifices worth it to your family, if your time at the business is cut short by your passing, then your family and loved ones may be left not only without your income but with large debts to take care of. Add to that the stress of running or selling your business after your passing, and there are many burdens you may be leaving behind for your family to deal with during an already difficult time.

Securing life insurance that will go to your family will help them to pay back those debts you may have incurred while running your business. It can also replace that lost income they will experience after your passing, giving them time to grieve and to get back on their feet. This extra money can also take care of some of the stress your family may face with handling your business after your death.

Your business

As a business owner, you have more people than just your family depending on you. Your business partners and employees rely on you and your business as their income and livelihood. If you have an untimely death, this could leave your business partners in a tough spot as they have to figure out the succession of the business. Your employees will also be affected during this transition period, especially if your business ends up being sold or closing.

By getting business life insurance you can lay out a plan for the succession of your business so it can continue in your absence without being a burden on your family. You can ensure that your business partners can buy out your share of the business so they can continue to grow it. This will also help ensure your employees continue to have a job and a steady income during this transition period.

What you need

When deciding what life insurance you should purchase as a business owner, keep in mind that you will likely want to purchase both personal life insurance and business life insurance. There are so many different types of life insurance, including term life and whole life, to consider, so it’s important to do your research.

There are multiple options for business life insurance, and the best one will depend on how your business is set up and how you want things structured when you’re gone. If you have business partners, then a buy-sell agreement is your best option. This lays out a succession plan in case you or one of your partners should have an untimely death and gives the other partners the opportunity to buy back your share of the business.

When you set up a buy-sell agreement, you combine life insurance policies with the other business owners so if one of the partners should die, the life insurance will provide the money for the partners to buy out the shares of the deceased partner from the surviving family members. This will help your partners to continue your business and provide for your family.

Getting the proper coverage for your family and business will give you peace of mind and help you to continue shaping your future. As you look into getting life insurance, it’s important to do your research and to talk to a financial expert in order to get the best coverage for yourself.

What are your thoughts on business life insurance? Are you a small business owner? What approach are you taking? Leave your thoughts in the comments below.

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Kendra Madsen is a freelance writer who loves healthy living, the outdoors, and obsessing over plants. When she isn’t writing, Kendra can be found exploring the mountains with her puppy or curled up at home with a good book.