Many small business owners eschew life insurance?

These days, millions of Americans may finally be returning to buying life insurance policies after years of not doing so caused by the financial downturn. However, one group that may not be picking up this kind of coverage quite so quickly again is one that might need it more than most: small business owners.

The reason that entrepreneurs across the country who run their own companies might need to have life coverage more so than someone who works for someone else's firm is that it will help to protect not only their families and companies, but also their employees, according to a report from Communities Digital News. This is because, much like the group health insurance that most companies provide for their workers, they may also be able to provide such plans not only to cover themselves, but also all those employees. That, in turn, can have a number of payoffs for companies in other ways as well.

For instance, it can be combined with other benefits as a way to better compel high-quality employees to stay on with companies by dissuading them from looking elsewhere, the report said. Life insurance coverage isn't usually offered by employers and if that can help to subsidize a type of policy they might have purchased anyway, then this so-called “golden handcuff” maneuver could go a long way toward improving workers' attitudes.

Another potential benefit for small businesses
In addition to the perks of better protecting workers and employers alike, these policies can also be used to help the companies themselves, the report said. For example, if a high-ranking executive passes away and that would normally have a negative impact on business overall, those losses can be mitigated by the payout of their life coverage policies and generally help to keep the company afloat over the period during which a replacement is sought. Given that small businesses in particular tend to operate on thin margins, this might not only help shore up lagging bottom lines, but potentially serve as a lifeline for the companies themselves.

Life insurance providers might want to do more to make sure they are reaching this kind of potential client in particular because of the benefits it can provide for all involved. Highlighting the reasons why this kind of coverage is often a boon to businesses could lead to slowly recovering sales numbers picking up even more appreciably in the future.