(By EconMatters) If you are self-employed or
you have your own business, you will no doubt have traversed one or two
difficulties on your path to success. Building up a business takes time,
effort, blood, sweat, tears, and all of that. So, if you have put so much into
this venture – and you continue to do so – surely it is something you would
want to protect?
Life insurance is something
you may have considered in your personal life. It can protect your family. It
can give you peace of mind. It can give you financial assurance that things can
go on as normal, should something bad happen.
But what about business
insurance? Can it offer the same kind of protection? There are many different
types of business insurance that can be tailored to suit many different
situations, businesses and individuals. More than just another expense, taking
out insurance for your business can offer a number of benefits.
Protect your Business
Running a business often
involves keeping up with certain debts. Money will need to be invested so that
the business can expand and grow. This could mean a business loan or a bank
loan. There could also be car loans and property loans. Employees may also have
business credit cards.
No matter what happens,
these debts will need to be paid.
Death, disability, illness
or injury can mean major upheaval within a company. It can mean there is no
money to pay off debts or to keep up with regular repayments. This is one of
the many important reasons to take out life insurance for your business. It can
protect your debts, it can allow the company to keep on doing business, and it
will be one less thing to worry about if something bad does happen.Protect your Employees
There are many reasons you
would want to protect your employees. Number one would probably be that without
them, productivity would stop. Without them there is no output, and therefore,
no business. This is the reason they are often thought of as a business's
Protecting your employees
with suitable life insurance can offer numerous benefits. Much has been made of
worker morale and what it means to business productivity. If an employee feels
like they are valued, then their morale is likely to be higher. This will help
to lessen absenteeism, and hopefully raise efficiency and productivity.
Apart from a morale boost,
life insurance obviously also offers financial protection. It can help to ease
the way financially should an employee suffer injury, sickness or death. www.suncorp.com.au offers several life insurance options.Funding Buy-Sell
A buy-sell agreement is used
to transfer control of a business and its interests from one party to another.
It can be between co-owners, or present and future owners, and can be used in
the event of one party retiring, leaving the company due to injury, or if one
One way to fund this type of
agreement is with life insurance. For example, if two business partners each
took out business life insurance equal to half the value of the business, and
one partner dies, their beneficiaries would receive the value of that half.
This means that half the
business is paid off, and the surviving partner does need to come up with a
large sum of money to pay off the dead business partner's family, allowing the
business to go on as normal – to a certain extent.
Financial Backup for
Business expenses insurance,
or business overheads insurance, can help to cover the costs of a business in
the event of death, disability or sickness. This type of insurance can help to
cover business expenses for up to 12 months, and can pay for day-to-day costs,
such as rent and bills.
At a time of upheaval, it
can provide financial backup when it's needed most, allowing you to think about
getting the business back on its feet.
Protecting your Income
Anyone who is self-employed
will know the financial risks of being their own boss. If everything goes
south, then there could be all kinds of trouble. If you are self-employed, one
way to protect yourself is with income protection insurance.
This can help to provide a
financial safety net for your business if something bad happens to you.
Obviously, this is not just for the self-employed – it can also be a great idea
for anyone working regular jobs as well.The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters