As a small business owner, it’s not just your family that depends on you—your business family does too. If something were to happen to you and you didn’t have life insurance, the company you worked so hard to build (and the people who helped you) would be significantly impacted. We get it. No-one wants to think about dying let alone plan for it, but here’s why that needs to change.
That’s where term life insurance comes in. This lump sum can replace your income to help protect your family. Or in the event that an owner, partner, or key employee dies, life insurance can also help to ensure the business continues. You might have thought about term life insurance before (haven’t we all?) but oftentimes we procrastinate and let it slip to the bottom of our to-do list. But just like death and taxes, term life insurance is an essential part of life and a crucial part of your financial planning.
That’s why we partnered with our friends at Bestow to help you put term life insurance back on the agenda. Once you understand what term life insurance is and the benefits for you, your family, and your business, it won’t just be something you need, it will also be something you truly want, too.
And Bestow understands how time-strapped you are—you have a lot on your plate!—so, now you can apply for your term life insurance 100% online, no exams, no waiting, no hassles. In fact, you can get a free quote instantly and be approved in as little as five minutes compared to potentially waiting several weeks or months when referring to life insurance.
Ahead, we sit down with Bestow CMO, Tannen Campbell to answer all of your burning term life insurance questions—what it is, how it works, why you need it, and who it benefits—because isn’t it time you protected your family, dependents, business, and legacy? We think so.
Here are some questions to ask and things to consider when buying term life insurance as a business owner.
What is term life insurance, who needs it, and how does it work?
This is going to sound corny, but personally, I think of my own term life insurance policy like a gift I’m giving my family for always supporting me. They cheered me on when I got my master’s degree (and the debt that comes with it), when I bought my house and everything in between. I pay the premium each month, knowing that if I were to pass away, those accomplishments won’t become financial burdens for them. The simplest way to put it, term life insurance provides a lump-sum payment to your beneficiaries if you were to die within the term you are covered.
So, let’s say you buy a 20-year term policy with $500K in coverage. You make the monthly payments, and if you die in the next 20 years, your beneficiaries would receive a check for $500K. Some insurance companies require medical exams or blood tests, which can take up to a month or more. Humblebrag: at Bestow, we never require a medical exam, and decisions are instant. In terms of who needs it, most people start to think about life insurance when they start a family or buy a home, but the truth is, it’s always a smart time to do that adulting thing and start buying life insurance. Here’s more information on term life insurance.
What questions should I ask myself before applying for term life insurance?
The first question I would ask is who would be in a bind if I were to pass away? The 2nd question is, how much of a death benefit my beneficiaries may need and how much can I afford? The 3rd and final question I would ask is, how quickly do I want to get covered, and do I mind getting a doctor’s exam or getting a blood test- there are options either way but these days it doesn’t have to be a time-consuming ordeal.
Why do I need term life insurance?
I don’t know any small business owner that doesn’t have some debt. Totally normal, you may just want to make sure that debt won’t overwhelm your family if you were to pass away. Also, if you have folks that rely on you and your income, term life insurance is a great and inexpensive way of providing that sense of financial resiliency at one of the hardest times in their lives. Is term life insurance necessary in your 20s or is it a good option once you start a family? What age or life stage should I start thinking about/signing up for term life insurance and why?
Well, one way to think of it, is that typically term life insurance will never be as affordable as it is today. Literally right now. Because the amount you pay (monthly premium) is determined by a number of factors including your age and health at the time you apply. The rate you get at 25 will differ from the rate you get at 35 and so on. So I can’t think of a downside to applying, dare I say, right now? Here’s a link to get a free quote.
How much does term life insurance cost?
There aren’t really price brackets but risk classes. A healthy woman in her twenties could find plans starting at $9/month. But some people pay more and really everyone is different. Life insurance companies consider a ton of factors to determine price; things like age, gender, health, and build. Each of those things in combination will have a unique “risk” that the insurance company needs to account for. When you apply, the insurance company will take all of the information in your application and assign a risk class based on your profile. Those risk classes have corresponding prices associated, based on historical consumer data. Fun fact: sleep is a strong indicator of mortality. I know I’m talking to an entrepreneurial audience, but this is your friendly reminder to get some sleep!
If I do die unexpectedly, how much will my family expect to get, and do I choose who gets the money?
Most people choose a spouse or child. You could select a sibling or set up a trust for a minor or even a pet—though that gets a little more complicated and requires an attorney. Essentially, you want to choose a beneficiary whose finances could be adversely impacted by your death. But the big perk here is that your payout doesn’t go through probate (like a will would), giving your beneficiaries a lump sum cash payment for things like funeral expenses and other bills. And in most cases, the death benefit is tax-free.
How do I make sure that the money goes where it needs to?
What your beneficiaries use the money for is completely up to them unless you assign a trust as a beneficiary. So if your son is a yacht kinda guy, and your brother is a college-first kinda guy, assign accordingly.
How can term life insurance help to protect my business from financial loss, liabilities, or instability in the case of the death of a business owner/partner?
Often times companies or small businesses will purchase a policy on a key executive’s life with the company as the beneficiary of the plan. This is sometimes referred to as Key-Person. For small businesses, the key person might be the owner or founder, someone who would have a large negative effect on the companies operations if they were to suddenly to pass.
Can I have my term life insurance payout contribute to a favorite cause or charity?
Yes, if you set up your beneficiary as a trust, you can stipulate how the death benefit is paid out which could include a charity or other entity.
Of course, no amount of money can ever replace a person but how can term life insurance help provide protection for the uncertainties in life?
Sadly, I’m sure many of us know what it’s like to lose someone close to us. And you know that in that aftermath, the very last thing you want to think about is money. I’ve found that life insurance benefits don’t just provide financial relief, but emotional relief as well.
How can Bestow help and what are the major benefits of going with Bestow?
Bestow offers a modern way to apply for term life insurance. It’s a great option for people who are looking to apply and get a decision without a lot of hassle. The key differentiator with Bestow is that the vast majority of people become customers in under 15 minutes, and there’s never a need for a blood test or medical exam (ever). The entire process is online, paperwork free, and if you’re approved, you can pay with a credit card and be covered the same day.
How much insurance do I need and how much does it cost?
No one can tell you exactly how much life insurance you need since it’s entirely dependent on your reasons for purchasing it in the first place. Even top financial experts don’t agree on a set amount: Some recommend choosing a term life policy with a death benefit anywhere from six to 20 times your annual income. Consider the amount of debt you have and your monthly expenses. Then think about who would be left behind if you were to die. If you’re the primary caretaker of your children, what would it take to cover all of your current and future responsibilities?
How can I apply?
It honestly couldn’t be simpler. If you’re interested, you start by getting a quote and choosing a price point that works for you based on a range of coverage from $50k-$1M (don’t worry you can change your mind later) After that, you fill out the application, which typically takes about 10 minutes (since I’m competitive, I’ll tell you, I clocked in just over 6 minutes). There are about 25 questions you’ll need to answer… mostly yes/no. After you hit “submit,” Bestow will underwrite you in near real-time and if approved, you’ll be asked for your beneficiaries and a credit card… voila, you’re covered! You can update your beneficiaries anytime just in case you have a change of heart.
Here are a few handy links to help you with your term life insurance research:
How does term life insurance work?
Choosing term length for life insurance
How much life insurance do I need?
Bestow is not a financial advisor and we recommend you consult with a financial professional before making any financial decisions.
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