Most business owners think of insurance as a necessary cost of doing business, not an investment. Just like the interest rate on merchant cash advances, it is extra money that helps facilitate a transaction, not necessarily creates income opportunities. However, there are times when you, as a business owner, should look at insurance as a form of investment as well as a safeguard to your business operations.
Annuities That Protect
An annuity is a sort of investment account through your insurance company. The premium on a life insurance policy is raised by a few dollars to cover the cost. Why would you want an annuity? You can withdraw from it in cases of financial distress. You can borrow against it if you need cash fast. It can be paid out over time as part of your retirement income so that you don’t need a reverse mortgage to make ends meet. It is most helpful if you are partnering with someone in your business and you want to make sure that if either were to suddenly die that the business could continue to function by having life insurance policies on key personnel in your company.
Business Interruption Insurance
Another form of insurance that you will likely use is business interruption insurance. You never know when forces beyond your control will derail your operation. A city-wide blackout, a major storm, or natural disaster can put you out of business permanently once the loss of income ruins your cash flow and puts you in debt. You can add business interruption insurance to the business property insurance for a small hike in premiums. Read the terms carefully as you may have to request a special rider for utility failures. When you consider how much each day of no work could cause you due to problems outside of your control, it pays to invest in business interruption insurance to keep your doors open when the light finally do come back on.
Buying insurance often feels like legalized gambling. That is, it seems like you’re betting that the amount paid in using a direct deposit loan will be equal to or less than the amount paid out. The $200 a month health insurance cost doesn’t seem worthwhile until you end up in the hospital, then it’s a huge necessity. So, what about life insurance? It’s not much of a gamble since everyone dies someday. How do you determine what you need for the least cost and greatest benefit?