Business insurance is an asset and it is important to protect that asset should anything happen to it. The question that arises is “Is business insurance an asset?” The answer to this question depends on the definition of assets and how they are defined.
As an accountant you know that all businesses are asset because they are enterprises that generate income and assets. But assets do not just mean money. They also mean property or any other thing that can be converted into cash. In this article, we will see how business is considered as an asset and also how it is protected. We will find out is business insurance is a valuable asset or not.
You might wonder how all this applies to you and your business. Suppose you own a car insurance company. You buy a whole life insurance policy and fund your company's retirement plan with it. You are aware that whole life insurance is a good thing to have as it gives you a guaranteed return if you outlive your car. But is your car insurance a precious asset or not?
Suppose now that you have invested all the savings of your company in a mutual fund. Now suppose that a member of your family has an accident and leaves your company and you lose most of your savings. What is the next best thing for you to do?
You can sell the whole lot of stock you have and get enough cash so that you can pay for medical expenses of the person who is left behind, but this is not what you want to do. You want to keep the money in your pocket because you want your business to grow. And if you want your business to grow, you need to make sure that your employees continue to work.
Is business Insurance an asset or an expenditure? It depends on whether or not you want to retain the policy or simply terminate it. You have the option of maintaining an ad, either for yourself or for your entire staff. You can also go ahead and take a full annuity. However, you will be better off dealing with a well established, well-recognized company who will not only give you a fair rate but will also not just disappear when you need them most.
A typical life insurance policy lasts for a period of ten years. There are some policies which cover a longer period of time such as twenty years. However, generally speaking, an and lasts for a period of one year. If you think that your business will expand and you will require a bigger premium, then you can opt for a life insurance policy which covers the additional amount. You may want to check out an individual health insurance plan also. Individual health insurance plans cover a smaller group of people and tend to be more affordable than a whole group policy.
When you think about how much it costs you to insure an individual employee with an ad and a whole group policy, you may come to realise that it is more cost effective to just buy yourself an individual health insurance policy and use that instead. And that is just one of the reasons why it may be a smart idea to buy an IS Business Insurance package. Another reason is because you can get discounts for various policies like when you buy multiple policies from the same provider. In fact, if you decide to take up IS Business Insurance, you should consider looking into business kar that is available with numerous providers.
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