Life insurance for small business owners - whether your business survive without that key personnel?
Insurance is a financial instrument. If it is possible to reduce the risk and is affordable, an insurance policy is worth looking into go. If it does not make sense for your particular financial situation, do not bother wasting your money on insurance and seek a better return on investment.
This is the logic that determines whether the purchase of life insurance on the importance, the key mission staff makes sense or not. Without life insurance, sudden death or disability of the business is important - employee, manager, executive or partner - a disaster can affect a small to medium-sized companies. If this person is a vascular lifeblood of your business, such a tragedy could result in termination, bankruptcy or total loss of the business itself.
However, if a company is set up for this loss, as all businesses should have in one way or another, this effect does not have to stop.
What is important?
People is very important, or "key" to the success of a business. Is important in small businesses who have contact or valuable skills. The main business also may be the only administrator in charge of running operations day to day or partners in need of financial support may be the detrimental con. A major life insurance policies, one can reduce the risk of loss of income is essentially supplanting who lost potential.
Key reasons to consider for individual employees covered
Financing hiring and training replacements. It is not cost-effective to hire and train staff level regularly. Finding a suitable replacement in the short term is very important to keep operations running smoothly, but the key person insurance can reduce the pressure.
Paying your bills. If you are a small business owner, chances are your income is tied closely to the performance of your business. With cover key person loss of key personnel will not cause you to repay a home loan or your credit card.
Caring for current shareholders. Usually, the person you want to hide that the company's owner, people in line to inherit the business. With life insurance, the company should be able to buy the business owner dies.
Keep other people who are important. The company should take a hit, top executives were most likely to start looking elsewhere for work. Property loses, the company will further weaken. In order to maintain other key employees, you'll want to offer bonuses in the race to prevent them from being recruited by other corporations.
Bank to meet contingencies. To ensure the growth of your business, its success should be adapted to an individual, some bank loans and require that they are insured.
The main type of insurance
People with disabilities. It's more likely that a staff member will become disabled than to die, but there are concerns the same fiscal.
Life insurance. Insurance services are very popular because they cost less than the coverage permanent. This way, if an employee leaves the business for any reason, the policy can be canceled.
Cash value life insurance. Should be an important policy as well as business owners, cash value life insurance can protect the company in case of death as well as acting as a resource to make payment to the person retired.
Taxation
Tax treatment related to insurance policies is complicated and depends on many factors. The following information is only a general idea of what is involved and should not be taken as professional tax advice.
In general, insurance policies, insurance is not tax deductible, but if certain conditions are following the IRS, can guarantee:
Reimbursement of funds lost to your company
Hiring and training replacement staff
Funding the cost of renting temporary
Payment of debt purchased by the business due to the loss of a key person who returned
No guarantee for executive bonuses
The final word
Beginning a business is basically equivalent to taking risks and could lead to uncertain time with customers temperamental and unpredictable. You might not think about what could happen with the loss of key personnel. The good news is that the fiscal cliff can happen when you lose people who are important can be eliminated if you have insurance.