Ifyou'relikemostpeople,youboughtlifeinsurancetoprovideforyourlovedonesintheeventofyourdeath.Butbecauseyou're self-employed, you may have an even greater need for life insurance: You'll want to protect your family after you die, as well as protect the financial needs of your business.
Why life insurance is important
Aslongasyouarealiveandhealthy,yourincome-producingcapabilityisrelativelysecure,andyouandyourfamilycanenjoythe lifestyle you have established. If you were to die, however, your family could face hard economic times. Your family's financial needs may include:
• Final expenses, such as burial and funeral costs
• Unpaid medical bills
• Income replacement
• Mortgage balance
• Debt repayment (credit cards)
• Education fund for children
• Emergency expenses
Why life insurance may be even more important when you're self-employed
Asasoleproprietor,youarepersonallyliableforallofthedebtsofyourbusiness.Legally,thereisnodifferencebetweenpersonal and business assets. By definition, a sole proprietorship ends when the owner dies. So, any losses or financial obligations at your death become the responsibility of your estate. It is possible that personal assets may have to be sold or transferred to pay off business debts. Business debts may include:
• Business loans
• Mortgage or lease payments on business location
• Payments due to suppliers, vendors, consultants, employees, and so on
• Taxes due to local, state, and federal taxing authorities
• Fees to lawyers, accountants, and other advisors to settle business affairs
Life insurance can be used to cover these debts, as well as to provide for the ongoing needs of your family after your death.
What to do about it
Askyourfinancialprofessionalorinsurancerepresentativetohelpyouassessyourneedforlifeinsuranceanddesignaprogram to fit your needs.
-Revel Private Wealth, Orange County Financial Advisors
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This article was prepared by Broadridge.
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