Term Life Insurance as ‘Small Business Insurance’
Most American entrepreneurs fall into one of two breeds; the wealthy, “let’s do something interesting with Grandpa’s money” variety, and the “bootstraps and shoestrings” kind. It is the second kind that is responsible for most of the hundreds of thousands of new startups that rise — and fall — every year in the USA. They are the ones who partner up to pursue new, interesting ideas and sink or swim repeatedly.
Smart startups buy every kind of insurance to protect against their failure but one type of insurance that a surprising number of them overlook is term life insurance. When a business only has 3-4 employees and all of them are critical to operations, taking out a 5-year term life policy on each of them is an incredibly sensible thing to do.
After all, what would happen if your top (and only) sales person(s) suddenly were killed in a car wreck? How would your business survive long enough to find a new one? Could you survive the shock?
Why term? Because whole life insurance can get expensive — and you never know why else your business might fail in the meantime. If you can make it through the first five years, your chances of making it twenty more years skyrocket. That makes the standard minimum 5-year term policy, often available for around $10 per person per month, the perfect way to ensure that the company will survive even if one of its crucial people doesn’t.
If your business does well at the end of the term, the policy can often be converted to, or supplanted by, a ‘key person’ whole life policy, which in theory your business will then be able to easily afford. Such a policy can be used as a vehicle to invest and withdraw funds to finance and fund special projects, help provide the foundation for a retirement plan, or simply provide emergency money should market shocks rock the boat.
Life insurance: no matter how big or small your business, there are a number of reasons to consider it.
Please contact us to help you find the right term life policy for you and your business.