Life insurance can help protect a small business after death

Feb 15, 2012

Life insurance can help protect against the death of a business partner.

Small businesses are usually run by a small group of owners, investors and workers. When a business is owned and operated by a team, and one of the main proprietors dies, a number of financial issues could arise. Jeff Haden of MoneyWatch said one potential solution would be life insurance.

With life insurance, business owners can make sure their assets and stake in a company are passed on to the people they choose. This means they can distribute their wealth to family members or business partners to make sure the right people have the resources they need to live comfortably or operate the business most effectively. With business partners, certain insurance plans would allow them to name each other as beneficiaries, and then use their benefit to purchase shares of the business, Haden said.

For financial options, SCORE, a mentorship non-profit for small businesses, has an e-guide available on its website designed to help business owners finance and use life insurance to collateralize a loan. Using a guide such as this could be a good resource for small business owners concerned about these life insurance issues. 

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