Is there life insurance for business partners?
Is there life insurance for business partners? The first thing that comes to mind when we think of life insurance is the financial instrument created to protect loved ones, in case the family provider is missing. However, life insurance can also be a guarantee for small businesses.
Many times, the partners of small businesses are childhood friends, who get together, contribute their talent and their money to undertake. These partners are the pillars of the business, if any of them were missing, the company could succumb and affect the people involved.
To insure the risk and the future of the business, there is life insurance known as Key Person Life Insurance or life insurance for a key person.
The curious thing about this policy is that it is the business itself that pays for the insurance premium and that collects the death benefit. Let’s imagine that both partners operate a home renovation business. One is the architect who is in charge of drawing up the plans and submitting them to the city departments for their approval, and the other is the contractor and investor. For the business to work, both are essential and if one is missing, replacing it could mean loss of time, loss of income, and even the ruin of the entire business.
But if you have this life insurance and one of the key people dies, the company collects the death benefit. An amount that must be sufficient for the business to have the necessary financial resources and time to find and hire a new person, replace lost income and deal with contracted debts. If a loan was used to develop the business, some lenders require you to have key person insurance to cover the financing of the investment.
If you doubt the benefits of key person life insurance, call Univista Insurance. Is there life insurance for business partners?