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As a new business owner, you would need to secure the financial stability of not just your loved ones but your business venture as well. With adequate life insurance cover, the future of your business venture will remain secure even in the face of an untimely circumstance like your demise, or demise of a fellow owner or a key employee.

While your own life insurance plan protects you from loan liabilities and ensures the financial security of your family, life insurance for your new business can be structured in a manner to protect your business in the unfortunate event of death or disability of a key employee or co-owner. It may also be used to buy out shareholders or partners in a buy/sell agreement if there has been an unexpected demise of an owner of the business.

Here are some important things to take into consideration when you invest in a life insurance plan as a business owner.

Things to Consider

Reliance Life Insurance offers you the flexibility to choose an insurance plan that is suited to your needs, goals and aspirations. Before you decide what type of cover would suit your needs, you need to consider the following key factors:

  • Your family – Your family's interests should always be your very first priority, and safeguarding them - your biggest responsibility. Investing through life insurance policies not only safeguards family against any loan liabilities and financial obligations that you may have incurred in your business. It also secures their future in the unfortunate event of your demise. Once you have secured your family against the untimely event of your death, you also need to secure your living future after your retirement, so that you and your family can continue to enjoy the lifestyle you currently have, live life independently on your own terms, as well as transfer your legacy to family members.
  • Your business – You need to safe-guard your company in the unfortunate event of the demise of a partner, co-owner or a key employee. If planned well, you can secure the sustenance of your business venture. Life insurance plans offer surviving business partners enough capital to buy the business assets of the deceased partner. It also helps sustain their business until a replacement is hired, thereby securing the longevity of the business.

Types of Plans that can help

Your insurance needs as a small business owner are unique. Reliance Life Insurance plans have been designed keeping your needs, goals and aspirations in mind, to provide you with solutions that will secure your business in times of uncertainty.

  • Term life insurance – Term policies offer you comprehensive and affordable coverage and safeguard your business against unforeseen events such as loss of income and outstanding loans. It is a great option for business owners who have partners that may be retiring in the near future. If you, your partner or a key employee have a mutual understanding that if either one passes away before their retirement, the surviving partner would purchase the deceased's half of the business. To make this possible, each one of you can invest in Reliance Life Insurance Term Plan, nominating the other partner or key employee as the beneficiary.
  • Whole life insurance – Whole life insurance plans offer dual benefits of life cover as well as returns. Whole life insurance is different from Term insurance. Term plans generally offer you insurance cover only for a certain period but no benefit on maturity. In certain whole life insurance plans, such as participating whole life plans, a certain portion of the premium amount you pay goes towards building the life insurance cover element, whereas another portion of the premium amount is invested. After paying the minimum due premiums as required under the plan, if the policy lapses, you still have the liberty of walking away with your investment account.

    These plans are ideal for business investors who want a long term insurance cover, short term or a specific period of time. As a business owner, in the unfortunate event of your demise, your beneficiary will receive both the death benefit as well as the monetary value accrued under the plan. This kind of insurance can also be used by the surviving partner to buy part of the business owned by the deceased partner.

How much to buy?

The amount of insurance your family and business requires depends on many factors such as the structure of your business, your expected income over your lifetime, future expenses and debts. Try our Insurance Need Calculator for more guidance.

In addition to offering investors financial coverage and protection, life insurance can be a vital wealth-building tool. When you pay your policy premiums on time, you are actually setting money aside to cover larger expenses that you may incur in the future in the event of an untimely circumstance. To build real wealth, you need to protect your most valuable asset – your life.

Life insurance offers you the benefits of systematic long-term savings, and the power of compounding which aids wealth creation. As your wealth grows, it becomes increasing important to safeguard it with a life insurance policy that protects your family from loan liabilities and financial obligations that may occur in the event of your untimely demise, planning for future expenses, as well as protecting your wealth.

Things to Consider

  • Lifestage – At every stage of life, it is important to secure your finances now to ensure a strong future and build wealth.
    If you are single, while you may have fewer responsibilities and financial obligations, you can take advantage of power of compounding over the long term and create wealth. What's more, your premiums will also be so at this stage, you may want to look at a smaller insurance policy that will pay off your loans and debts in case of an unfortunate event.
    If you are newly married or have kids, you have additional responsibilities, goals and aspirations Owning your dream home or funding a child's higher education may be on your mind. One critical factor that always needs to be prioritised is the financial stability of your family. At this stage of your life, you may want to consider locking in a lower rate on a policy that will remain in place for the next few decades. If you are thinking more on a long-term basis, you can consider buying an affordable whole life policy that will remain in force throughout your life time and at will also provide benefits to your family in the unfortunate event of your demise.
  • Type of Plan that can help – Whether you are a single individual who has just started out on your own, a newly married person with plenty of dreams and aspirations to achieve, a loving parent who wants to fulfill your child's dreams or a retiree who wishes to live the twilight years of your life independently, Reliance Life Insurance has many plans that will suit your needs.
  • Participating policy and Non-participating policy – Participating policies allow you the benefit of receiving the profits of the insurance company in the form of bonuses. These policies provide dual benefits of protection and returns. Bonuses are usually paid annually and depends on the terms and conditions of the policy. Non-participating policies do not entail the sharing of profits.

  • ULIP Plans – ULIPs are Unit Linked Insurance Plans that give you the dual benefit of investment cum protection by offering you life insurance cover as well as market linked returns on your investments. By investing in a ULIP, part of your premium goes towards providing life cover, whereas the remaining amount is invested in market linked investment options such as mutual funds. You have a choice of a variety of funds available under the plan you choose and the flexibility to manage and switch between the funds you opt for. Your returns depend on the performance of the fund you select. With ULIPS, you can opt to pay your premiums as a single lump sum, or break it up into smaller components to pay either annually, half-yearly, quarterly or monthly, based on your convenience. For more information on our ULIP plans click here.

    Endowment plans - Endowment plans let you decide the amount you would like to set aside as your Sum Assured based on your current financial position and your expected future expenses. These plans provide you with the benefits of life cover, and create long-term savings to fulfill your goals at every stage in life. With endowment policies, you are paid a lump sum amount on survival as well as death. The maturity periods of endowment plans are generally 10, 15 or 20 years. If you need a certain sum of money at a particular age in future, investing in an endowment plan would be perfect. To know more about Reliance Life Insurance Endowment plans click here.

Life insurance for family protection

In today’s uncertain world, it is important to keep yourself and your family absolutely safe from any unforeseen harm. To minimise the negative repercussions of untimely circumstances, it is important to invest in a life insurance policy which helps build the strong foundation that is required to shield yourself as well as your family.

Life insurance offers your family much-needed protection during vulnerable time. It secures them against loan liabilities, debts, and financial obligations. It also ensures that your spouse maintains her or his standard of living, your children achieve every goal they have dreamt about, and your family never has to compromise on anything related to finances, even long after you are not around.

Things to Consider

How much do you need?

The amount of life insurance you need depends on several factors. But whether your policy is long term or short term, you have to choose one that offers you the right kind of benefits depending on your goals, aspirations, future expenses as well as your current life stage.

  • Life insurance offers you the peace of mind knowing that even if you are not around, your family will not be saddled with the responsibility of paying off your loans and sorting out your finances during vulnerable times. When you invest in life insurance, your housing loans, personal loans as well as your outstanding credit card payments will be covered.
  • Life insurance offers your family protection and financial stability even the unfortunate event of your demise. It ensures that their needs are always fulfilled and they are able to maintain their lifestyle even you are no longer around to provide for them. This means the financial independence of your spouse, higher education for your children, and the retention of your family home.

Types of Plan that can help:

  • Term insurance - Term policies offer you comprehensive and affordable coverage and safeguard your family against unforeseen events such as loss of income and outstanding loans. When you invest in a term plan, you will have to pay a cost, known as Premium. The coverage that you enjoy can range from 1 year to 30 years, depending on the policy you choose. In the unfortunate event of your demise, your beneficiaries will receive a lump-sum payment immediately which will secure their financial future. To know more about Reliance Life Insurance Term Plans, click here.
  • Credit Guardian Plans - Credit Guardian Plans help protect your family from loan liabilities, debt and financial obligations in the event of your untimely demise. It ensures that your personal loans, housing loans as well as any outstanding credit card bills are taken care of when you pass away, so that your family is not burdened with dealing with it at a vulnerable time. You can choose the interest rate so that your life cover amount can be decreased accordingly, thereby ensuring that your policy will always be able to pay any outstanding debts. For more information on Reliance Life Insurance Credit Guardian Plans, click here.