Business Life Insurance
Insuring the Life of Your Business
Most people think of life insurance as a product to replace missing income for families in the event of the death of a breadwinner. But life insurance can also be used to make sure that a business continues to thrive after the loss of an owner or key employee.
Common Business Uses of Life Insurance:
- Buy/Sell Agreement Funding. Once an agreement is reached to sell business ownership from one party to another, the buyer can insure the life of the seller, so that if the seller dies before the planned completion of the transaction, the sale may be completed, and the business survives.
- Continuation of a Partnership. Partners may insure the lives of each other, so that the surviving partner may buy out the interest of the deceased partner. This helps both the deceased partner’s heirs and the surviving partner. It also allows the business to continue.
- Key Employee Coverage. The success of many businesses is due to the talents and efforts of its owners or key executives. The death of such a key person may cause a monetary loss to the organization, or cause the business to locate, recruit and hire a replacement. Insuring the employee’s life may provide the funds needed to overcome the loss and continue the success of the business.
- Collateral for a business loan. Small business owners are familiar with the term “personal guarantee.” Lenders often require the pledging of personal assets to collateralize business financing. Assigning the proceeds of a life insurance policy can fill part of this need.
- Deferred Compensation. Let’s say you have an employee that you don’t want to lose. You may execute a Deferred Compensation Agreement which allows the employee to collect $5,000 a month, beginning at age 65, payable for 15 years. Your company could purchase a $1 million permanent life insurance policy on the employee’s life. If she dies prior to retirement, her family receives the benefit. When she retires, the cash value that accumulated in the policy can help pay the agreed-upon deferred compensation.
Our experienced Maine insurance agents can help you insure your business’ survival by looking at the big picture. When you work with Noyes Hall & Allen, you’ll receive:
- Life insurance quotes from the top insurers available.
- Advice from our experienced insurance agents, tailored to your individual business.
- The ability to work with the same agent who handles your other coverage, such as business property insurance, workers comp insurance and commercial vehicle insurance.
- Ongoing support and service from a local third-generation family-owned firm.
For a business life insurance quote and to obtain answers to these and hundreds of other Maine insurance questions, call Noyes, Hall & Allen Insurance at 207-799-5541.
At Noyes, Hall & Allen, we’re independent and committed to you.