Valley First

Business owners often overlook protecting their most valuable asset

Nov. 30, 2015

PENTICTON, B.C. —Small business owners are often the boss, human resources advisor and facilities manager rolled into one. Their energy, time commitment and expertise about their industry means they are pretty much indispensable. So what happens to their business if they get sick, injured or die?

“Unfortunately the business can struggle without them and typically suffer significant losses,” says Nicole Sollitt, life insurance specialist and broker with Valley First Insurance, part of First West Credit Union’s Valley First division. “The good news is business owners can avoid risking what they’ve worked so hard to grow by having the appropriate protection and plans in place before disaster strikes.”

Key-person insurance is a life insurance policy placed on the owner of a business or a “key” employee—someone deemed crucial to the running of the business, such as a plant manager or director of sales. The policy is purchased by the corporation and the beneficiary is either a related party, such as the lender or the business itself.

“This insurance provides needed funds in the event of sudden death or incapacitation and will give the business time to react to the essential employee’s absence,” says Sollitt.

These funds can be used to pay off debts, provide cashflow during a period of sales decline, or finance the cost of hiring and training a replacement. While the key employee would be the insured, the benefit and proceeds from the policy typically go to the company who owns the policy.

“Benefits from the policy are tax free as well, which makes the product quite appealing,” says Sollitt. “The premium for the protection plan is determined by the amount of coverage required and length of time it is required for.”

Lifestyle factors such as age, sex, smoker status, and whether the insurance is term or permanent will also influence the monthly premium price.

“Most people get life insurance to protect their loved ones in the event of premature death, but often overlook their business’s financial security in the same circumstances,” says Sollitt. “Why risk losing all that you’ve worked so hard for?”

About Valley First

Valley First is a premier provider of banking, investment and insurance services for residents and businesses in the Okanagan, Similkameen and Thompson valleys. As a division of First West Credit Union, B.C.'s third-largest credit union with 54 branches and 38 insurance offices throughout the province, Valley First brings innovative products, an extensive branch network and local decision making to the banking experience. For more information on Valley First, visit www.valleyfirst.com.

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