Life Insurance for Entrepreneurs

The modern-day entrepreneur has put their heart and soul into their business in order to build a decent lifestyle for themselves and their loved ones. There is no doubt that they work hard and are extremely important to the functionality of their business. So what happens when a business owner is no longer able to show up to work every day and provide their knowledge and expertise to their business?

Hopefully the answer is that their insurance kicks in and provides them or their family the financial stability necessary to prevent a financial struggle. A business owner’s ability to work is the most important asset to their company. Therefore, it is crucial that business owners, along with other working Canadians, properly protect their ability to work and earn an income. They can protect the potential loss of income that can come from death, injury, or illness by purchasing the following types of insurance policies.

Life Insurance
Life insurance will pay out a tax-free, lump sum benefit to the owner’s beneficiary in the event of death to the owner. When a business owner passes away, their family is left with a business that they may not know how to run and it may have significant debt attached to it. Life insurance can provide the funds needed to pay off debt, as well as replace income that would be lost if the owner passed away. Also, life insurance proceeds are often used to fund a buy–sell agreement between partners within a company.

Disability Insurance
Many Canadians understand the value of life insurance, but many still are unaware of living benefits. Disability insurance will pay out a tax-free monthly benefit in the event that the policy holder becomes sick or injured. A major illness or injury could prevent a business owner from working and earning an income. Thus, it is just as important, if not more important, for business owners to protect themselves from these events as it is to protect themselves in the event of death. There are many different options and features that can be implemented in a disability policy and it is important that business owners sit down with a life insurance agent in order to discuss these options and tailor a policy to meet their specific needs.

Critical Illness Insurance
Individuals are 10 times more likely to develop a Critical Illness than they are to die prior to age 65.  Critical illness insurance pays a tax-free lump sum benefit after the diagnosis and survival of a covered illness. Many insurance companies offer coverage for at least 20 major illnesses, with the main ones including cancer, heart attack, and stroke. The insured can use this benefit any way they please.

It is crucial that business owners properly protect their ability to work and earn an income. Many owners do not think twice about insuring important assets like buildings or equipment, yet they seem to forget or hesitate to insure their most import asset, which is themselves, their ability to work, and their income.

Article written by: Mike Castagna