6 Reasons Entrepreneurs Need Life Insurance

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6 Reasons Entrepreneurs Need Life Insurance

Get free insurance advice on demand!

As an entrepreneur, you probably never felt the need to buy a life insurance policy, right? Why would you invest in such a policy when there are dozens of opportunities waiting for you to “multiply” your investments?

Well, think about this — how will your business fare after you have passed away? This is something that no one likes to think about, however, you need to face the facts. If you do pass away in an unforeseen accident, then your business will slowly die. Who will support your family? Who will fulfill your children’s needs? There are plenty of things that one should be concerned about because after your death, your family might be living hand to mouth without the insurance cover.

And this is why you need to consider buying life insurance. Without going into detail, let’s have a look at the two basic life insurance policies:


Term Life Insurance

As the name says, this insurance policy is pretty straightforward and simple. It covers you for a short period of time, and the benefits are provided to you once the cover ends. Unsure if you should get Term Life Insurance or Life Insurance check out our: The Difference between Term and Life Insurance


Permanent Life Insurance

This insurance policy is for life. Here, the benefits you get are quite different. The policy works as a savings account. Your premium payments work as investments and you can borrow a certain amount when in need.


6 Reasons Why You Should Buy Life Insurance


Sudden Illnesses

Crippling illnesses that limit your mobility can prevent you from giving your full attention to your business. You might not be able to take part in the day-to-day decisions, which can lower your profit margin. With life insurance, you don’t have to worry about this.

You have worked hard to create an empire from the ground up. Everyone wants to preserve their life achievements. When you will be gone, you will be remembered by the legacy you left behind. To make sure that your business runs smoothly even after you have passed away, you can rely on insurance. You can outline specific instructions that will help your family members understand how the business needs to be handled after your passing.


Loss of Employees

Your manager got a better job and now he is planning to move to another city. On such a short notice, it is highly unlikely that you will find a replacement. You are worried about all the operations that require the supervision of a manager and it’s possible that some things might not go smoothly.

With the help life insurance, you can mitigate this cost to your person. A life insurance policy gives you the benefit to run your operations smoothly without anything affecting your profit margin. You can use the insurance proceeds to pay for the expenses and things that the manager handled. 


Guaranteed Growth

One of the best things about a life insurance policy is that your investment grows every year. No matter how low the market is — your money will keep on growing. This is something completely different than mutual funds. There’s no real wealth in the 2% to 4% that you get in mutual funds. Depending on the type of life insurance policy you have chosen, you can grow your account to great heights.


Dividends Are Taxable

Some insurance companies offer dividends and some don’t. Let’s say that you chose an insurance carrier that has been in the business for decades. It’s possible that they pay dividends to their loyal customers. The best thing about this dividend is that when the company makes a profit, the amount you receive is not taxable. This one benefit alone is the biggest reason why you should buy a life insurance policy


Instant Cash 

You are on the clock and need to complete an order for an old client. The problem is that you are short on funds. It often happens that a loan application submitted by an entrepreneur or small business owner gets rejected. There are plenty of reasons behind the rejections but that’s not what we are here to discuss. 

Sometimes, a short influx of cash is all you need to cover you expenses. Many business owners lose loyal clients because they are not able to deliver the products on time, mainly due to cash shortage. As mentioned earlier, a permanent life insurance policy works as a savings account. You can use the savings for borrowing funds and keep it as collateral security.

However, there’s one thing you should keep in mind: do not borrow money unless and until you are completely sure that the reasons you are putting your savings as collateral will pay for itself in a short time or you will be able to recover the full amount after delivering to the client.


Guaranteed Insurance

It’s important to buy a life insurance policy early in your life and then check back on the coverage as your lifestyle changes. You can always increase the premium to match your needs. You never know at what point in life you might get diagnosed with a disease. With a chronic illness, it will be impossible for you to buy an insurance policy. Even if you do somehow get your hands on one, the premium and benefits will not be to your liking.

One benefit of a life insurance policy that you won’t get anywhere is that not only does it protect your business but your family and future too. Plus, the tax-free savings is the cherry on top that gives you peace of mind that if you do fall on hard times, you will have backup. Your business will be secured and you will not lose your clients. 


If you are looking for a life insurance company that comes highly recommended, then visit Pawson. The company provides different types of life insurance policies for families and individuals. To know more about their policies, contact them at 203-481-8898.

Speak with a Pawson agent for free and get Connecticut-specific insurance advice on demand.

Speak with a Pawson agent for free and get Connecticut-specific insurance advice on demand.

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