Most businesses, whether large or small, usually face the question of whether or not a business life insurance policy is relevant or not. A business life insurance is a handy investment for companies of all sizes.
As a multifaceted tool, business owners can utilize it to attract top talent, ensure a smooth succession, and protect against revenue loss. Highlighted below are reasons why business life insurance is a valuable investment.
Attraction and retention of employees
A 2018 survey by Willis Towers Watson on employer/employee satisfaction indicate that 78% of employees are likely to stick with an employee because of their benefit programs.
If employees are unhappy with their employers, they tend to leave the organisation, which could result in lost production and additional recruitment costs. By subscribing to employee life insurance policies, you assure your workers that their loved ones will receive a lump sum if they were to die while in service.
Most employees are concerned about their loved ones’ financial position upon their untimely death. The efficient reward system that takes care of the next of keen upon a worker’s unfortunate death, shows employees how their loved ones are valued, hence less likely to quit.
Protection against lost revenue with business life insurance
Every business has that one or more employees whose death or illness can jeopardize their operations and profitability. Their talents mean a lot to the survivability of the company, and that is why employers must have a contingency plan for their death or illness.
Keyman insurance protects a business against revenue loss caused by the death or illness of an employee or director key to the company’s success. Business life insurance pays a lump sum to a company upon the loss or illness of a key worker.
Business can use the proceeds from such compensation to replace the lost expertise, make up for the lost revenue, and so forth, thus ensuring business continuity
Business’ succession plan
Lack of succession planning can adversely affect a business as a result of power struggles between partners. This could in turn impact negatively a company’s productivity or motivate employees to seek other opportunities due to uncertainties brought by chaos.
Apart from shielding a company from the loss of a partner, a shareholder protection policy facilitates succession planning. Other partners can buy back the shares of a critically ill or deceased shareholder, thus reducing conflicts between remaining partners that could affect the smooth running of a business.
This also ensures that the shares do not end up in the hands of someone who does not have the best interest for the business.
Unique tax benefits
Business life insurance provides ways for a company to accumulate wealth tax-free both when the insured is alive and upon his or her death. For instance, the policy can be written in trust thus minimizing tax liabilities.
The policy can also earn dividends or interest tax-free, and be used to acquire tax-free policy loans. Money that would have otherwise been channelled to taxes can therefore be used to cater to other business expenses.
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