If you’re a business owner, you might not know that life insurance is an excellent tool for securing your business. Follow along as we discuss where (and why) to get the best term life insurance rates.
» Compare: Term life insurance quotes
If you own a business, you’re well aware of the financial needs of your company. You want to protect your investment—not just for the sake of your company—but for your family as well. If you would die unexpectedly, term life insurance can protect your family’s future and help secure the future of your business.
Why Business Owners Need the Best Term Life Insurance
It probably isn’t an exaggeration to say that your hard work is the life’s blood of your business: without your vision and commitment, your business couldn’t thrive (or even exist). The same is true when it comes to your family’s financial future—whether you’re the primary breadwinner or your partner has a career, your income supports your family’s daily needs and has a direct influence on their long-term quality of life. As a business owner, having a term life policy can also protect your family from the costs and liabilities associated with your business should you pass on. Here are just a few examples:
- Commercial debt secured by your assets. If you have personally-guaranteed business debt, then your family may receive less from your estate after you pass away.
- Legal fees connected to the transfer of business ownership. If a family member will inherit ownership of your business or will receive a lump sum payment from the business upon your death, associated legal costs may prove a burden to your family.
- Lost income as your business adjusts to your passing. It is not uncommon for the death of an owner to have a significant impact on the revenues of the business as ownership and/or management undergoes a major change. A term life policy will prevent your family from having to consider how to replace this lost income during their time of grief.
In addition to protecting your family, term life insurance can have a unique role in protecting the future of your business.
Here are three ways term life insurance supports your long-term business goals:
Term Life Insurance Can Help You Qualify for a Loan
Even business owners with excellent credit ratings may face challenges applying for a loan in uncertain financial times or simply based on the age and/or financial stability of their business. Nevertheless, having a financial “cushion” is as essential for the future success of your business as it is for your family. One way it may be easier to secure a business loan is to purchase a term life insurance policy that names your lender as the beneficiary. This process is called collateral assignment. It protects your estate in the event of your passing and it provides additional security for your lender.
A Term Life Policy Allows You to Plan for Ownership Succession
While many entrepreneurs are meticulous in planning their long-term growth strategy, some overlook the need to have a strategy to protect their business in the event of their death. This is fairly common—about 60% of business owners don’t have a succession plan detailing how they wish their company to be managed after they have passed on. A cross-purchase, buy-sell agreement is a simple way—despite its complicated sounding name—of making sure that if you pass away, the transition period for your business partners will be smoother. Under this model, business owners take out life insurance policies on each other that match the value of their shares in the business. These policies provide a payout that is meant to cover any loss of income or business value that the company may suffer when a partner dies.
Key Person Term Life Insurance Protects Business Income
Just like a cross-purchase, buy-sell agreement, key person term life insurance protects the financial security of your business in the event of an untimely death. Unlike the former, a key person doesn’t have to be a business owner, and it names the business, rather than a business partner, as the beneficiary. A key person could hold any position in your company that is essential to your businesses success. The policy payout from key person term life insurance will cover the loss of income during the search for a replacement for the key person and/or take care of the costs of a new hire.
» Learn more: The Best Term Life Insurance for Business Owners
Why Business Owners Need the Best Term Life Insurance Rates
As a business owner, your eye is always on the bottom line. While it’s smart to be thrifty when building your business, being budget-minded shouldn’t keep you from looking for the best term life insurance rates for your life insurance coverage.
Fortunately, term life insurance is affordable for most business owners (and families).
Combining term life insurance policies—that allow you to purchase multiple policies of different lengths (also called laddering)—let’s you meet the changing needs of your business without paying a penny more than you need to. For example, you might purchase a 10-year life insurance policy to cover your business obligations when your company first launches and hasn’t yet earned a healthy income. If you take on significant debt with a long repayment period or purchase a commercial building, then you may take on a 20-year policy to cover your commercial mortgage or loan payments.
As a business owner, finding the best term life insurance policy is critical to the future of your company. Here we explain how to do that easily today.
Here’s how to find the best term life insurance rates in minutes
First, click through to our life insurance quotes tool and answer a few short questions (you can do this anonymously).
- Your zip code: Some insurance options are not available in every state. We use your zip code to find the best term life insurance rates available to you where you are located.
- Your gender: Only life insurance companies in Montana ignore gender when calculating your premiums. Luckily, our quotes tool will find the best term life insurance rates whether you are male or female.
- Your smoking status: Unfortunately, smoking status isn’t as simple as you might think. Insurance companies don’t just look at your current smoking status, but also how recently you quit, if you no longer smoke. If you are currently a smoker, it will be a challenge to find rates that mirror those for a non-smoker, but we will work with you to find the best term life insurance plan at a premium that you can afford.
- Your date of birth: Naturally, your age will impact your premiums. Young, healthy applicants generally receive the best term life insurance rates, but you can still find affordable rates as you age. It is always a good idea to apply right away, as rates go up each year, and you don’t want to leave your business or family unprotected.
Once you’ve entered your data, you’ll land on a page that allows you to select the amount of coverage that you’d like (use our needs calculator to get an idea of what amount makes sense), and play with the slider to see how much your premiums will vary.
Ready to see customized quotes? Next, you’ll enter the following information (again, you can do this anonymously):
- Height/weight: These are two of the most important factors in determining your rates. If your weight falls within a “normal” BMI you will likely receive some of the best term life insurance rates if you are a healthy, non-smoker without other risk factors. However, even if you are not at a low BMI, we will help you find the best term life insurance available to you.
- Tobacco use: Each insurance company may look at your smoking status differently. Some may view the form of tobacco that you use (such as vapor or e-cigarettes) differently than others. Our insurance advisors can guide you toward the plans that are the most affordable with the best coverage for your current tobacco usage status.
- Heart health: Your medical history along with your current health is a big factor in determining your rates, but having a heart condition (or having one in the past) won’t necessarily keep you from finding the best term life insurance rates.
- Family history: Insurance companies also look at your family’s health history to assess your rates.
Once you’ve entered your info, click “show me my quotes” to view a range of premiums customized for you. If you see a quote that you like, you can complete your application online on Quotacy in less than 5 minutes.
There are numerous reasons why it makes sense to have one (or more than one) policy for the specific purpose of protecting your business, as well as your estate. The biggest reason, perhaps, is that your family depends on you, and the legacy that you worked so hard to create should be left intact for their benefit after you’re gone.
At Quotacy, we value the hard work that business owners put into growing their businesses and we want to make sure that your investment in your business (and your family) is protected. Learn more about how to get the best term life insurance rates as a business owner.
» Calculate: Life insurance needs calculator
About the writer
Director of Inbound Marketing
Kate is Director of Inbound Marketing working on business strategy, SEO, and writing for QuotacyLife. Kate's gift is explaining complex financial planning and life insurance topics in a simple and direct way to help families become more financially savvy and empower themselves to make wise choices. She works with Quotacy's underwriters to ensure the financial tips shared in her blogs are spot-on and truly helpful to anyone researching the ins and outs of life insurance online. If you would like a topic to be covered in our blog, leave Kate a comment below or connect with her on LinkedIn.