Life insurance: a financial tool in the hands of entrepreneurs
Life insurance: a financial tool in the hands of entrepreneurs. There is no doubt that the fundamental objective of having life insurance is to guarantee the financial well-being of the family – children, and spouse – in the event that one is missing. But if the insured owns a business, having life insurance, in addition to protecting their loved ones, serves as a guarantee to obtain a loan for their business.
Many loans, backed by the Small Business Administration -SBA, in English- require the employer to have life insurance for approval. This can be term life insurance, that is, valid during the life of the loan.
For its part, permanent life insurance can serve as collateral to a lender. If the debtor ceased to exist, he could still collect the borrowed funds. The contract is provided with a collateral guarantee that establishes that the first part of the death benefit will be used to pay the remaining loan balance and the rest of the money to the family. As a result, the entrepreneur can access a loan that allows him to take his business to the next level. If the family and the lender were to die, they would be covered by the death benefit. It also guarantees that the family does not inherit any debt.
If you’re in business, it’s smart to use life insurance as a financial instrument. At Univista Insurance, insurance specialists can tell you how to do it. Life insurance: a financial tool in the hands of entrepreneurs.