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Taking Care of "Small" Business: LIFE Foundation Offers Five Insurance Tips to Help Small Business Owners Make Sure Their Businesses are Secure

Washington, D.C. ‘ March 21 ‘ Owning your own business can be one of the most rewarding experiences of your life. However, according to a LIMRA survey, only 1 in 4 small-business owners has a sufficient succession and continuation plan in place. By not having a plan, small business owners are putting at risk the financial futures of their business partners, their employees and their own families.

"Many people dream about owning their own business, but that dream can become a nightmare for your loved ones if that asset isn't protected financially," said David F. Woods, CLU, ChFC, president of the LIFE Foundation. "Every small business owner needs to ensure that he or she has adequate insurance coverage to protect their families, their business partners and key employees so that no matter what the future holds, their business can continue to provide for those who depend on it."

To help small business owners understand their insurance options, the nonprofit LIFE Foundation offers the following five tips for putting in place a proper plan that will not only protect their business, but themselves and their families. As with any insurance decision, LIFE advises meeting with a professional insurance agent to discuss your individual needs and learn more.

Tip #1 ‘ Obtain adequate life and disability insurance to cover all your assets.
To jumpstart or help grow their business, many small business owners take out loans that are secured with personal assets. That‘s why it‘s important to protect your income and added financial responsibilities with enough life insurance. While you‘re at it, don‘t overlook the importance of disability insurance, which can provide income to you and your family if you were unable to work for an extended period of time.

Tip #2 ‘ Protect all of your business's overhead commitments
If you were to become disabled and unable to work for a prolonged period of time, your whole business could collapse. Business overhead expense insurance is designed to cover the operating costs of running your business in the event that you can‘t because of an illness or disability.

Tip #3 ‘ Have a plan in case your business partner becomes the only partner
If you have a partner or co-stockholder it is important to put a buy-sell agreement in place. This is an agreement between business partners to buy out each other‘s share of the business in the event of one of their deaths where life insurance plays an essential role in providing the funds to make the purchase. Many small-business owners expect that their family members could take over, however loved ones often don‘t have the skills or desire needed to pick up where you‘ve left off. Disability buy-out insurance is a similar arrangement and provides money for company owners to purchase a disabled owner‘s holdings in the company after a certain period of time.

Tip #4 ‘ Insure your right-hand man (or woman)
If you have star employees who greatly contribute to your business‘s bottom line, you should also consider purchasing key person life and/or disability insurance for them. Should anything happen to that employee, the death or disability benefit can help make up for lost sales or earnings and help cover the cost of finding and training a replacement.

Tip #5‘ Take care of your employees, and they‘ll take care of you
There are many benefits you can offer to attract and retain employees, ranging from health and life insurance to dental and vision insurance, or even voluntary options that enable employees to purchase or increase benefits themselves. What‘s important is that you work with a qualified insurance professional who specializes in the employee benefits needs of small businesses.

For additional information and helpful tips, visit the section of LIFE's website ( dedicated to small business planning.

About LIFE
The Life and Health Insurance Foundation for Education (LIFE) is a non-profit organization dedicated to addressing the public's growing need for information about the essential role life, health, disability and long-term care insurance play within sound financial and retirement planning. LIFE also seeks to remind people of the important role insurance professionals perform in helping families, businesses and individuals find the insurance products that best fit their needs. LIFE was formed, and since then has developed a diverse educational program that empowers consumers with the knowledge needed to make informed insurance and financial planning decisions. To learn more about these topics, please visit

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