One of the keys to running a successful small business is being able to adapt to change. Maybe you need to buy an expensive new piece of equipment to keep pace with a competitor. Or perhaps you have to hire a new person with a specialized skill set in order to expand into a new area. Whatever the case may be, anytime you make big changes in your business is an ideal time to find out if it also makes sense to make changes to your life insurance plans.
To get a sense if it's a good time to reevaluate your life insurance coverage, ask yourself the following questions:
- Has your business taken on more debt recently?
- Has your business become more dependent on a key employee or several key employees?
- Has the value of your business changed lately?
Life insurance can help address all of these scenarios. For instance, you could buy an individual life insurance policy to cover a new loan that you may have taken out for the business. If an employee or group of employees have become crucial to the ongoing success of your business, you can buy "key person insurance." Then, if one of these employees dies, you'll have the financial wherewithal to either hire a replacement or work out an alternative arrangement. If you have business partners and the value of your business changes significantly, it might be time to revisit your buy-sell agreement (assuming you have one). This is an agreement between owners to buy out a deceased owner's share of the business in the event of the co-owners retirement, disability or death.
You've worked far too hard to leave the future of your business to chance. Make sure you have an insurance plan that will protect your family, your employees and the business. For help getting started, visit the Small Business Planning section of our site.