Small business owners often dream of success and becoming a well-known local shop, but many do not consider what could happen if they were to pass away, according to Paula Restrepo, volunteer counselor for the Princeton chapter of Service Corps of Retired Executives. Restrepo writes on My Central Jersey's website that business life insurance could be a key to relieving a lot of stress during an unexpected death.
Restrepo said business life insurance may not even be an optional move, as she said many banks require owners to have a policy to cover the cost of the loan in case the borrower dies. She said the policy can also be used to give money to employees to buy the business or to the family to help ease the sale of the company
"A related type of insurance is 'key person' or 'key man' insurance, which compensates your company for the loss of any other employee who is vital to the business operation," Restrepo writes. "The business has funds to tide it over while the business slows down, and there are funds to apply to the search for and compensation of the key person’s successor."
The LIFE Foundation said business life insurance helped Ernest Folks turn over his auto repair shop to his son Ernesto. After getting news of lung cancer, he was able to use the business life plan to pay off bills and give the business to his son.