Are you a startup founder or a small business owner? If yes, then you will naturally have to buy term insurance in order to secure the future of your business. Sounds surprising? What does term insurance have to do with the future survival of your business? Read on to find out more about this.
How Term Insurance Keeps Your Business Dreams Safe
Let’s take a sudden scenario into account. Imagine Mr. Resham is the owner of a startup and he is around 40 years old. He has two children, who are 12 and 8 years respectively and a spouse who is not working at the moment. He also quit his job sometime earlier to establish his own startup and is doing good business at the moment, with clients spread across the country. Yet, in a cruel twist of fate, Mr. Resham passed away all of a sudden due to undetected and sudden medical complications.
While mourning his demise, his spouse discovered that his startup needed to meet its working capital requirements in order to survive and meet orders. Until and unless orders can be fulfilled, clients will not make payments. At the same time, equipment has to be maintained and employees’ salaries have to be paid. There are no concrete avenues for selling off the firm as well. Simultaneously, she also wonders how to meet the increasing family living costs every month, along with the children’s current and future education costs. Add to that a personal loan left behind by Mr. Resham, along with a small business loan, which has to be repaid on time. The family does not have too much savings and has to now look to monetise its gold assets and sell off the house to move into a rented property. Mrs Resham will also have to start looking for a job to somehow make ends meet in this situation.
Do you want it to happen to you? The answer will obviously be No.
What if Mr. Resham had chosen to buy term insurance early on after he established his startup? Then this is what would have happened (assuming adequate coverage):
- Mrs Resham would have had ample money to set aside for covering long-term household and children’s education costs.
- She could easily repay the loans left behind by Mr. Resham.
- The remaining money could have been used to keep the startup afloat, paying employees and motivating them to fulfill orders and get payments down the line. This would naturally keep the business chugging along. This would ensure a steady income source for Mrs. Resham and the children.
Conclusion- Financial Safety Nets Are a Must for Startup Owners
Going by the above instance, it is safe to say that choosing to buy term insurance will naturally help you create a financial safety net for your family from the very beginning. At the same time, factoring your business and other debts and working capital requirements into the coverage calculation will help you leave behind a lump sum amount that will help your startup survive and potentially maintain a steady income stream for your family in case of your unfortunate demise within the policy tenure.
