Why Life Insurance Is Vital for Entrepreneurs

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70 NEWS JAPAN - It may be because we are natural optimists, but it is remarkably common for entrepreneurs not to take out life insurance. In fact, according to LIMRA’s Life Insurance Barometer study, 41 percent of business owners and individuals do not have life insurance, meaning they likely don’t have the necessary funds earmarked to support their business, employees and their loved ones in the event that something happens to them.

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Entrepreneurs have a unique mindset and perspective that sets them apart from other professionals or even artists. Their company is born with a mission in mind, and this creates individuals who tend to be both persistent and impatient, yet disciplined. When launching a business, entrepreneurs are supported by investors, teams and their families who all share in their company’s vision, but these groups are also the most at risk should that vision be cut short by an unforeseen event. Without proper life insurance protection, the sudden death or disability of a founder could derail a company, resulting in layoffs, bankruptcy and possibly the collapse of the business itself.

There are various reasons that entrepreneurs may neglect to take out an adequate life insurance plan. Establishing protection for themselves is rarely a top priority when starting a business, as finances are stretched and owners are subject to a never-ending to-do list.

When I started BizEquity, I was newly married and knew that I was going to be bootstrapping my business. I also knew that, like many other entrepreneurs in my position, at the onset, my income would be non-existent. As with most small business owners, I’d be drilling into my own savings in order to invest in my venture. Yet, I was determined that somehow, some way, I was going to make my business work -- and the only thing that could get in my way was time. In order to feel good about risking my short-term financial future, I knew I couldn't put my new family -- including my wife, dog Briggsy and future children -- at risk.

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No one likes to think about the unexpected events that could occur, such as an injury, disability or even death, to yourself or a business partner, but a good business person should anticipate all possibilities whether they are positive or negative. However, we should as entrepreneurs recognize that from the onset we are putting ourselves, our business and our family at risk if we fail to take out adequate insurance. From a business perspective, it’s a smart idea to take out life insurance, which can protect your company from financial loss, liabilities or instability in the case of death. It can also assist you in maintaining your business through turbulent times, by providing short-term cash flow, keeping your operations running and suppliers happy.