Business Life Insurance for the Self-Employed

Life insurance is a particularly valuable resource for the self-employed. Not only can life insurance protect your family, it can also protect a business. Read on to become more familiar with how you, as a business owner, can use your policy to insure the security of your business and your family.


This page:

  • Advises about insurance for the self-employed

  • Lists various applications of a policy for a business owner

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Cover your debts

As the sole proprietor of a business, it is likely that you are also entirely liable for the debts assumed by business endeavors. In the event of your death, you are still held accountable for any business liabilities.

If you do have substantial business debt, and you have no life insurance for the self-employed, your personal assets will be liquidated in order to satisfy these financial responsibilities. Without some type of protection, you run the risk of leaving your family with nothing.

Ensure your business's future

To ensure your business's future, you should consider purchasing a permanent life insurance policy as part of a small business plan. Your death benefit should be large enough to cover all your business debt and provide necessary funds for the future success of your business as well as your family.

With this protection, you can rest assured your business will not drive your family into debt after your death. Instead, there will be ample funds to settle your business debts so the business can flourish as it did under your direction.

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If you have financial commitments related to a small business, you don't want to leave your family with the burden.
Get a free quote from Efinancial, and find out how little protecting your business could cost you.

Protect your co-owners

As a business co-owner, purchasing a life insurance policy on each of the key employees is a good part of a small business plan. The beneficiary of these policies should be the business itself and should cover the cost of finding a suitable replacement for the loss of an exceptional business partner.

Although it is difficult to imagine the effect the loss of one person can make in the success of a business, such occurrences often result in slowed production and reduced earnings. Having extra funds to finance the search for a new knowledgeable business partner, make up for lost profits, and weather the possible tough transition is crucial for your business. To avoid this, we recommend purchasing a permanent life insurance policy naming the business as the beneficiary of the death benefit.

Other advantages

Life insurance can also fund a buy/sell business agreement. These arrangements benefit the family of a business co-owner in the event of their death.

In essence, it is a deal between business owners to purchase a co-owner's portion of the company at certain price if the co-owner dies. Often these agreements are funded with a life insurance policy. The policy's proceeds are used to buy out the deceased's share of the company.

There are several types of buy sell agreements which vary in who purchases the policy - the corporation, the owners, or a trust. We recommend speaking with a financial planner and insurance agent if you are considering this option.


Next: Using life insurance to do some good: charitable giving

Learn even more:

Getting the lowest possible premium on your life insurance is almost like an art form. There are many variables to consider, and to get the right balance of term length, benefit amounts, and policy riders and illustrations, you need to take a careful step-by-step approach to the buying process.

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