Life Insurance Quotes: Life insurance for business owners

Would your business be able to survive the death of an owner, partner or other key person? What impact would an unexpected death have on your family and personal finances?

These are questions that all business owners need to ask themselves when considering life insurance quotes, because even the most successful enterprise (and life) can come unstuck if plans aren’t made to protect the input of owners and key people.

The most common reason for not paying enough consideration to the human contribution to business is the belief that the chances of death are slim. However, statistics tell a more compelling story.

This chart illustrates the probability of death, based on NZ Life tables

Probability of at least one partner dying before age 65

Average age of partners	Four partners in business	Three partners in business	Two partners in business
35	51%	41%	30%
45	48%	39%	27%
55	38%	30%	21%

When deciding whether to obtain (business) life insurance quotes is right for you, consider the following:

Business debt

An inability to pay loan instalments, tax bills, salaries or rent would spell disaster for most businesses. How would your business cope if key owners or employees where permanently out of the picture?

Business ownership

Death can force a change of ownership structure, making it necessary to draw on cash reserves and assets. The alternative can be getting a new, unwanted, business partner – possibly a relative of your deceased business partner or their accountant for example.

Having a formal shareholders agreement in conjunction with a buy / sell agreement and life insurance policies to fund your buy / sell agreement is critical to ensuring that your business can continue.

Additional benefits

As well as providing funds which can be used to clear debt, take care of ownership and help with business continuity there are often other benefits built into business life insurance policies which are extremely valuable while all of the owners are alive.

For example the ‘business safeguard option’ which allows for the initial sum assured to be increased by up to five times up to age 65 with no further medical requirements (each insurance companies terms and conditions around this benefit differ and will be limited by the individual policy wordings).

This is a great benefit when the value of the company is expected to grow. Essentially the life assured is medically underwritten at the time of application, effectively ‘locking in’ any future cover that is required based on their current health condition.

Then when future increases in cover are required due to changing business circumstance, e.g. increased business debt or increased business value new cover can be added with only financial justification required. Again, each insurance company has different terms and conditions for this benefit and policy wordings.

To ensure that your business can survive the death of an owner, partner or other key person and to get cover that matches your needs it is important to seek specialised advice. A business risk adviser can help you work through the risks to your business and can develop a plan that will allow your business to continue if the worst happens.

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