Main/Knoxville:  (865) 588-7000
Nashville:  (615) 557-4296
(800) 588-7001

Do you have a go-to guy or girl in your company—you know, the one who everyone counts on to hold things together and get the job done? Most businesses do, and their contributions are immeasurable. But did you ever stop to think about what would happen if that person suddenly passed away? Imagine the impact that could have on your day-to-day operations and the overall value of your business.

If you have a partner or employee that you can’t afford to lose, it’s important to make sure that you have the financial resources needed to buy out their interests or keep things running long enough to find a replacement. While that may sound easy enough, it can pose a challenge for small businesses in particular since many of them operate close to the margin.      

In some cases, borrowing the money could be an option; however, you may find that banks and other lenders are often less willing to extend credit if they know how important the deceased was to your business. (This is especially true in the case of a co-owner or partner.) Moreover, the additional debt could put your company at risk if you used the business as collateral or the payments reduce profitability.

If you’re looking for a simpler, less risky option, you may want to consider a life insurance policy instead. Here’s how it works:

Your business purchases a life insurance policy on behalf of the key employee. Since your company is the owner and beneficiary of the policy, it is responsible for paying all the premiums. Should the insured employee die while the policy is in effect, the death benefit proceeds would pass directly to the business, providing an immediate influx of cash that you can use for debt repayment, liquidity, or even recruiting and training. What’s more, this money is typically free from federal income tax, so your business can use every penny.

As you can see, purchasing a life insurance policy can be an effective way to safeguard your business and minimize the impact of a key employee’s death. And, depending on the type of policy you purchase, you may find it to be a cost-effective option as well. 

Posted 2:23 PM

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
Change the CAPTCHA codeSpeak the CAPTCHA code
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive

View Mobile Version

         Knoxville Main Office:   9700 Westland Dr, Suite 102, Knoxville, TN 37922
Knoxville Downtown Office:   130 W Jackson Ave, Suite 105, Knoxville, TN 37902
Nashville Office:   c/o Industrious, 1033 Demonbreun St, Suite 300, Nashville, TN 37203
This website is intended to stimulate dialogue about your protection and does not alter or interpret your insurance policies. Always refer to your policy for details about your coverage.