Businesses of all types are run and staffed by valuable people to the organization, and protecting them with a life insurance policy is a hedge against uncertainties. Providing life insurance to key personnel and employees protects assets, provides money for survivors, and acts as a source of funds during tough times. It can also be offered as part of a benefits package to attract potential employees. Here’s a look at how a life insurance policy can enhance an employee benefits program for a NYC business.
Personal Life Insurance for a Small Business
If your business is a one-person operation or involves family members, an individual life insurance policy can provide financial coverage if something happens to you. It will provide financial support for your family and help them wind down the business or keep it going. You can also borrow against the policy’s value if you need access to cash during tough times.
Another way a life insurance policy can be used is to give money to family members who aren’t involved in the business. This reduces friction and minimizes the potential for legal action among those who won’t be involved in the business going forward.
Key Person Life Insurance
This type of insurance protects the business against losing an important individual. This person can be the CEO, a person who possesses core skills or knowledge, or the only person who can carry out a specific duty. You can get a life insurance policy to cover the loss of anyone whose loss would severely affect the operation of the business.
Another version of this insurance is known as key employee retention. It’s part of a deferred compensation package given to a key person as part of their retirement plan. The business owns the policy and then uses its cash value to provide additional retirement income to the employee. If the employee passes before they retire, the company can take the money to repay itself for the premiums and give a death benefit to the employee’s beneficiaries.
Buy-Sell Agreement
A buy-sell agreement is typically used for partnerships and invoked when one partner dies. The policy helps the surviving partner or certain employees to buy out the deceased partner’s share in the business. All partners can take out This type of policy as part of their operating agreement or create a stand-alone deal. The policy aims to minimize disruptions to business operations and ensure its survival.
Attracting Talent
A life insurance policy as part of an employee benefits package can help businesses attract talent. Getting a group life insurance policy makes it easy to include this coverage and also makes it easier for an employee to get a policy. Group policies tend to include those with pre-existing conditions, making getting an individual policy difficult.
The pricing of group policies depends on the coverage provided, and getting life insurance quotes for NYC businesses and the surrounding area helps you understand what influences the cost. You’ll also learn about what’s involved in adding new employees and the application process, making adding a new hire to the policy easy.
Getting the Right Life Insurance Policy for Your Business
A business life insurance policy is a flexible financial instrument that helps you protect your business against an unforeseen event. It also enables you to attract the employees you want working for you. At Margolis & Associates, we can help you get the right life insurance policy for your business and tailor it as your needs change. Get in touch with us today to discuss your coverage needs.