How to Choose Life Insurance for Small Business Owners

As a small business owner, your life insurance policy isn’t just about protecting your family — it’s about protecting your business, your employees, your partners, and your legacy. Choosing the right policy can be the difference between business continuity and collapse.

Why Business Owners Need Life Insurance

When you’re the backbone of your business, your unexpected absence could cause:

Lost revenue
Operational shutdown
Employee layoffs
Debt left to family or partners

A life insurance policy protects against these risks, ensuring your business survives even if you don’t.

Step-by-Step: How to Choose the Right Policy

1. Define Your Business Risk

Start by asking:

Would your death cause financial hardship to the business?
Would debts or obligations fall on family or partners?
Do you want to fund a succession plan?

If yes, life insurance isn’t optional — it’s essential.

2. Choose the Right Type

✅ Term Life Insurance
Great for covering loans, employee salaries, or specific time-based risks.

✅ Whole Life Insurance
Includes cash value — ideal if you want to build wealth or offer a buyout fund.

✅ Key Person Insurance
Covers the business if you (or a key employee) pass away, funding continuity.

✅ Buy-Sell Agreement Funding
Lets business partners buy out your share without financial strain.

3. Calculate How Much Coverage You Need

Factor in:

Outstanding business debts
Revenue you generate annually
Employee costs
Taxes and legal fees
Buyout or succession funding

👉 A good rule: 10–15x your annual business income is a starting point.

4. Consider Adding Riders

These optional add-ons increase flexibility:

Waiver of premium
Accelerated death benefits
Return of premium
Disability income

They ensure you’re protected in real-world scenarios—not just on paper.

5. Compare Offers from Multiple Carriers

Not all insurers treat business life insurance equally. Rates, policy structure, and underwriting can vary dramatically.

Don’t Settle for One-Size-Fits-All Coverage

At THAgency, we compare offers from nearly 100 carriers to tailor the perfect plan for your business. Whether you’re a solo founder or managing a team of 50, we make sure you’re covered right.