From the Piggy Bank

From the Piggy Bank ~Series on Planning for Your Family & Business

York Region Parent provides resources and articles for moms who are also entrepreneurs or thinking of starting their own business. From more information please see our resource centre called "mums in biz!"

Life Insurance
by Kathleen Hogg

Life Insurance is a topic that not many people want to talk about, but it is a necessity and certainly when planning your business. These plans should be separate from each other, so that there is no difficulty to your beneficiaries when you are gone.

For your family, it can help protect your family members from having to incur the costs of a funeral/burial and any estate closing costs. Settlement costs are, well costly. There are lawyer fees, estate management fees, taxes that still have to be paid and these costs add up quickly. The cost for an average funeral is about $10,000 - 15,000. It is also a great way to give your children or family some wealth. That may sound strange, but it can be able to give them maybe a University education, graduate school, a down payment for a home or money to start up the business they always wanted. Planning for that is just as important. You may also wish to donate some money to a charity of your choice.

For business it is equally important, as you want to be sure that your business is taken care of, especially if you have a partnership or employees. Life insurance can act as a Buy-Sell agreement essentially it will buy out your shares of the business from your partner. This prevents difficulty between the surviving spouse or family and the business partner. It also can assist the business continuity, as it can replace the loss of income or allow another person to be hired to fill in for the duties of the business partner. If the business is a sole proprietorship, it can help the closing costs for the business. Life insurance can also provide money to continue the business if it is to be sold. There are many and varied ways to structure life insurance in a business it is important to have this information.

For either family or business purposes you should consult a professional regarding life insurance and your needs. You can do this through your financial advisor, lawyer, and accountant or through a life insurance agent. Make sure that you have a full understanding of the policy and what you have structured. Even though, this is not the most pleasant of discussion, life insurance is a key component in your overall financial plan.

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Kathleen Hogg Consulting guides the new entrepreneur and/or small business; through a step by step process and assists them in building a comprehensive business foundation; to allow them see their dreams come to fruition.