If you run your own business, then you’ll no doubt have spent time with your head in a book looking at the various insurance policies and plans you’ll have to take out to protect your business and your employees from harm and legal charges. There’s no getting away from the fact that signing up for and managing your insurance policies can be time-consuming and costly, but it’s a necessary evil and can protect the future of your business and its best interests.
But one insurance type that is commonly overlooked for small business owners is life insurance. Of course, there’s no law or requirement for you to have a life insurance policy as part of running a business, but doing so can give your employees and family peace of mind. Below, we’ve rounded up some top tips for business owners looking to take out a policy.
Consider your options
Typically, life insurance policies are separate from your business and are designed to give your family financial peace of mind and stability should you die suddenly. Not only does it reassure you, but it means that your family can continue to live in your home without having to worry about financial pressures such as repossession.
There are two types of life insurance policies that you can consider – term-life insurance policies, which run for a fixed period and are designed to pay out only if you die during the term – and whole-life policies, which will pay out no matter when you die, so long as you keep up with your monthly insurance payments. Both are popular, but the former is often cheaper than the latter.
A third option to consider, instead of or on top of a standard life insurance policy, is Business Protection Insurance, which is designed to protect your company’s future upon death. Although this won’t have an impact on your personal life (for example, it won’t cover the cost of your funeral or pay off your mortgage), it will ensure that your business can continue should you die or become critically ill and can no longer run your business.
Get the best offer
As a business owner, you’ll no doubt want to get the very best value for your money and protect your assets for the lowest cost possible. Therefore, you should exercise caution if you’re offered life insurance as part of your bank account policy or as an add-on to your home insurance, for example, as these policies are often under powered or expensive.
Shopping around is the best way to get a good deal on your life insurance policy, and you’ll find discounts whether you go for a fixed-term policy or a whole-of-life policy. Don’t forget that, if you’re looking for the business insurance quotes, you can use sites such as Be Wiser to compare offers from providers to be sure you’re not spending more than you should.
Think about tax – and keep your policy personal
As an entrepreneur, you’ll no doubt be familiar with putting expenses through your business and claiming back when filling in your tax returns – but a life insurance policy should not be pushed through your business unless it’s part of a Business Protection Insurance policy. To make sure that you don’t get into a pickle when filling in your tax returns, you should seek the help of your accountant when signing up for a policy to check whether it’s appropriate (and legal) to put your life insurance through your business, or whether you should avoid it.
Consider using multiple policies
The type and length of your life insurance policy you choose will depend on your age and financial situation. Before you sign up for the first policy, you should take time to look at the wants and needs of your family (for example, whether your children will head to University or whether you have a second home with a mortgage) and consider separate policies which have different fixed amounts and guarantee periods which you can use to your advantage.
Be proactive with your insurance
Life insurance policies can give you reassurance and confidence that life for your family will carry on after you die, but it’s important you comply with the policy’s specific requests. If you start smoking, get married, move to a new home or welcome a new addition to your family, your insurance premiums may increase, so be sensible and keep them up-to-date with the latest information. Not giving your insurer an accurate record of your personal and medical history can invalidate your policy and cause heartbreak, so it’s not worth the risk.
If you have family and staff members who depend on you financially, then a life insurance policy is something that you should consider. Shop around, do your research and find the best policy for your needs and budget. Good luck!