Business life insurance provides coverage for key individuals in a company, helping to manage the difficult situation of their unexpected death. It can be especially important for small businesses, providing financial resources for finding and training new employees. The cost is usually a small fraction of the total death benefit and is excluded from federal tax obligations.
As a means to help ensure the continued function of a business in the event that a key person within the organization dies, business life insurance provides coverage that can help make a difficult situation easier to manage. The scope of business life insurance can help the business with the wide range of factors that arise when an owner or key executive is no longer able to handle his or her usual responsibilities.
Essentially, business life insurance can be thought of in terms of key insurance per person. By insuring the lives of the people who are critical to the life of the business, you can protect yourself from the unexpected death of an individual who possesses a skill set that underpins the success and ongoing life of the business. While corporate life insurance cannot completely fill the gap left by the death of a valued member of the organization, life insurance coverage will provide the company with financial resources that can be applied to the expanses associated with finding and training a new employee. . Proceeds from corporate life insurance can also be used to defray the cost of acquiring consultants and other temporary services that will help the company continue to operate in the near term.
Business life insurance can be especially important for small businesses, especially partnerships and sole proprietorships. In these situations, business life insurance can help the surviving partner or beneficiaries of the deceased owner have the resources to keep the business in balance. The additional resources will buy the survivors time to make decisions about the future layout of the company. This can come in the form of outsourcing functions on a short-term basis or training someone to step in and take over the necessary functions. The resources provided by business life insurance provide the time needed to decide whether to continue the business, put the business up for sale, or close the company and sell the assets.
In terms of cost, business life insurance is usually available at annual rates that equate to a small fraction of the total death benefit. As an added incentive, the total death benefit is usually excluded from federal tax obligations.
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