Review Your Business Insurance

By Fishman, Allen | THE JOURNAL RECORD, February 22, 2001 | Go to article overview

Review Your Business Insurance


Fishman, Allen, THE JOURNAL RECORD


If you die, will the family business survive? A common response is that the business will be sold if the principal dies and the family will be taken care of.

What has not been considered is how long it would take to sell the business and the decreased value of the business because of the owner's death.

How much business debt do you personally guarantee?

Will these debts be taken care of if you die?

One way to build continuity is to hire a manager who is capable of running the business in your absence.

Does your business provide life, health and disability insurance for you? There are two basic types of life coverage.

Term insurance insures something or someone for a specific reason or period of time. Permanent cash value insurance is usually enforced until the death of the insured party or some specific age.

If your company provides you with a life insurance policy, are you certain of who is the beneficiary and who is the owner of the policy? Is the owner the beneficiary? Should the policy be transferred to a third-party owner to avoid estate tax? Does the beneficiary designation on the policy coincide with your estate plans?

How much insurance is enough? Look at your current and long-term life insurance needs. Should you buy additional insurance for a new mortgage or a new child? What are the short-term and long-term needs of your survivors? You need to consider such items as mortgages and college educations. Don't forget inflation.

If the company provides health insurance, what is your deductible? Are you protected in a catastrophe? With respect to disability insurance, you need to determine how long you can get by without your income.

Take a hard look at expenses such as housing, auto, utilities, taxes, food, and special expenses. Another question is whether the business should contribute to a retirement fund for you or for other partners or stockholders.

Make an estimate of your projected living expenses at age 65, taking into consideration any mortgages. Will the surviving spouse be secure? This process is not a pleasant one, but it is an important part of determining what insurance is right for you.

Other important business protection includes property damage; liability insurance for your property, product liability insurance; business interruption insurance if your business has to stop operations because of a catastrophe and employee insurance. Is there insurance on the life of a person who is economically essential to your business? …

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