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Business life insurance

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You can’t always anticipate the unexpected, but you can protect your business from it.

Taking out sufficient insurance coverage is a fundamental step of business planning. From insuring against fire and theft to income protection, there’s a range of necessary policies to take out. One such important type of coverage is business life insurance.

Why we like:

Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.

  • Apply online and get a decision instantly
  • Cancel your coverage at any time
  • No annual fees

Why we like: LadderLife™ Life Insurance

Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.

  • No brokers trying to upsell you
  • Your rate is locked in until your term expires
  • 30 day money-back guarantee
Promoted
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3 types of business life insurance to understand

There are three main types of business life insurance, which include:

  1. Key man insurance
  2. Buy-sell agreements
  3. Business overhead expense insurance

1. Key man insurance

Key man insurance is a life insurance policy that insurers the employer against the loss or permanent disablement of a key worker in the business.

What is this used for?

You can take out key man insurance on any employee whose loss would impact the companies profitability and result in additional costs including:

  • Cost of hiring a temporary worker
  • Cost of recruiting a successor
  • Loss of ability to conduct business until successor is trained
Who needs it?

As well as a business partner, other employees who can be considered a key person in a company include:

  • Managing director
  • Financial executive
  • Computer programmer
  • Sales manager

This is far from an exhaustive list, but a key person is basically anyone who provides a business with a direct and substantial economic gain.

2. Buy-sell life insurance agreements

A buy-sell life insurance agreement is a written agreement that sets out each business owner’s obligations when it comes to the transfer of business equity in the event one partner passes away or becomes permanently disabled.

What is this used for?

Buy-sell agreements typically have two parts:

  • Transfer agreement. The transfer of the departing owner’s interest to the remaining owners is outlined in this part.
  • Funding agreement. How the departing owner or their estate is compensated for their share is the second part.
Who needs it?

Those who own the business take out a buy-sell agreement. It ensures a smooth transition for the business should one partner be forced to leave, and means your business remains financially protected should something go wrong.

3. Business overhead expense insurance

Business expenses insurance provides an ongoing monthly benefit to help you cover your fixed business expenses when you’re unable to work due to illness or injury.

What is this used for?

Business expenses insurance is used to keep paying staff, clients and other regular bills until you’re back on your feet. It can be used to fund:

  • Staff salaries
  • Rent
  • Phone, Internet and utilities
  • Vehicle and equipment leasing costs
  • Business repairs and maintenance
  • Loan repayments
Who needs it?

Business expenses insurance is generally available to businesses with less than five employees that produce an income. It’s a crucial consideration for many small and medium business owners to keep your business afloat if you’re temporarily unable to work.

Why business life insurance is a good idea?

Business life insurance covers a wide range of potential costs that result from a business owner passing away or becoming totally or temporarily disabled. Coverage can come in handy for a number of reasons.

  • Cut the cost of hiring a temporary or permanent replacement for a key worker
  • Reduce the financial burden of not being able to operate as normal without a key worker
  • Prevent hiccups in business transitions when an owner is forced to leave by laying out guidelines ahead of time
  • Pay salaries, rent, bills and other business costs while you’re temporarily unable to work.

How to buy business life insurance

You can secure business life insurance in a number of ways. You’ll find these ways similar to buying personal life insurance.

  • With an independent agent. Find an agent who’ll work in your best interests and help you find a policy that matches up with your business’s needs.
  • Using an online broker. Use an online service that matches you to one or several providers.
  • Going to the provider directly. Research providers on your own and find one or more to approach about a policy.

Compare life insurance companies today

Name Product Issue Ages Coverage Range Medical Exam Required
21 - 54 years old
$50,000 to $1,000,000
No
Affordable 2-, 10- and 20-year term life insurance policies. Instant quotes and no medical exams.
20 to 60 years old
$100,000 to $8,000,000
No
Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.
18 - 85 years old
$10,000 to $10,000,000+
Depends on provider and policy
Compare quotes from 16 life insurance companies side by side.
18 - 64 years old
$100,000 to $3,000,000
No
Customized term life insurance policies up to $3 million, no medical exam required.
18 - 80 years old
$50,000 to $25,000,000
Depends on provider and policy
Get a quote within minutes from more than a dozen insurers.
20 - 85 years old
$100,000 to $1,000,000
Depends on policy
Get a term or whole life insurance quote from Fidelity Life - starting as low as $15/day.
20 - 80 years old
$25,000 to $10,000,000
No
Quickly get a quote for coverage with this marketplace, which compares term & whole life insurance policies from 45+ carriers.

Compare up to 4 providers

Bottom line

Business life insurance comes in several forms, each providing a section of coverage that can help keep your business afloat if you lose an owner or key member. Alongside a solid personal life insurance plan, it can help protect your family and the business you’ve built.

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