Life Insurance for Grading Contractors
Life insurance is one of the most important insurance products that you’ll ever buy for your family's business. It’s one of the best ways that you can ensure that your business and your loved ones will be taken care of, regardless if something tragic happens to you. We know that talking about life insurance and what you're needs may be can be a difficult process, but there are factors that can the process even more difficult.
Insurance protection helps you plan for an uncertain future. Yet, not enough business owners leverage life insurance for what is certain: their departure from their business. Whether it comes from retirement, long term disability, or death, one day you will no longer be at the helm of your organization and failing to plan for this transition can be the greatest threat to your family business's survival.
We all know that not planning ahead is bad for us and our business, and significantly reduces the chance of our business successfully transitioning to the next generation. As a leader in insuring family business in the construction industry for the last 50 years, you can bet that my insurance company pay close attention to the data.
- Is Your Spouse Or Child Ready To Run Your Business?
- Are Your Employees Ready To Report To Your Spouse or Child?
- Is Your Family Ready To Have Your Spouse or Child Take Over The Business?
- Are Your Creditors And Customers Ready And Willing To Do Business With Your Spouse or Child?
- Have Your Adequately Prepared For Your Exit From The Business?
As a result of not planning early, unfortunately for contractors and non-contractors alike, finding life insurance at an affordable rate can be a daunting proposition. Life insurance for grading and excavation contractors can sometimes cost double to four times more for life insurance than non-contractors. This is due to the increase risk from the operation of heavy machinery which can cause an increase in mortality ratings.
Quick Guide to Life Insurance for Grading and Excavation Contractors
- The Reality of Contruction Safety
- North Carolina Experts in Insurance Underwriting and Risk Assessment
- Questions to Expect from Life Insurance Underwriters when Applying for a Life Insurance Policy
- Preferred Best Rates for Grading Contractors
- Standard Rates for Grading Contractors
- Why work with Aaron Peacock from North Carolina?
- Is Affordable Life Insurance Available for Grading Contractors Who Operate Machinery?
In this post we’ll provide a little advice and a few ideas on things to thing about when looking for life insurance or long term disability insurance coverage as a grading or excavation contractor. We’ll also walk you through the process of getting a firm quote for life insurance to help ensure you get the insurance you and your family need.
Regardless of your current health status or business status, I am here to help you to understand your needs and find an affordable life insurance plan to protect your family and your grading business. If you were to pass away unexpectedly, your loved ones could be left with a massive amount of debt and unpaid expenses. Your bonding surety may no longer issue performance or bid bonds. The lender for your equipment may reach out in concern over the equipment notes. Not having adequate life insurance to provide a runway of working capital after your death could cause your employees to start looking for jobs elsewhere.
How Much Life Insurance Do I Need?
Calculating how much life insurance your grading business needs totally depends on what your ideal succession plan looks like. Should you die in the next 5 minutes, who would take over the business? Would your spouse or child legally inherit your assets including the business? Would you prefer that a key employee or other specified individual take it over and pay your surviving family a fair market value? These are all items that you will need to decide. For the sake of simplicity lets look at three different avenues that your business can take should you die prematurely:
- At time of death your spouse or child Inherits the business and wants to continue to run
- At time of death your spouse or child Inherits the business and wants to sell it
- At time of death a key employee or specified individual buys the business from your surviving family for a pre-decided price
Let's look at a calculation that alleviates the stress of both options 1 and 2:
If your ideal succession is for your child or spouse to continue to run the business and continue the legacy that you have built, then I have created a simple and easy to use formula to figure out how much life insurance your business should buy on you. I call it the DIG CALCULATION:
Finally, there is option three. What most specialized contractors call this is a "Buy Sell Agreement" and here are the steps to pursue if this is what you would like to happen.
Step 1: Get a current business valuation
Step 2: Decide who you would like to buy your shares of the business in the event of your death. Is it your current partner? A key employee? A competitor?
Step 3: Hire an attorney to draft a written and legally binding buy-sell agreement
Step 4: Fund the buy-sell agreement with life insurance
Learn more about this in this post: The Simple 4 Step Process To Business Succession Planning with a Buy-Sell Agreement
Planning for your business future is of utmost importance and have a thought out plan in place will give you peace of mind knowing that you have all your bases covered.
Here are some additional tips and resources to help you with buy-sell agreements:
- Top Attorneys For Buy-Sell Agreements in Western North Carolina
- Get a Free Business Valuation
- How Buy-Sell Agreements Work...A Definitive Guide
- Permanent or Term Life Insurance For Buy-Sell Agreements
- What About the Real Estate? The Often Missing Piece in Buy Sell Agreements
- Do I need a disability clause written into my Buy-Sell Agreement?
- Buy Sell Agreement Check Up
What Factors Affect The Price of Life Insurance
The cost of life insurance can vary significantly due to many factors ranging from health to age to job duties and much more. Let's dive in to some of them and take a look at some sample rates to maybe give you a better understanding. No matter what the rating you get is, you still have to decide on whether you have a true need for the coverage. Think about it this way: If you just purchased a $400,000 GPS Controlled state of the art piece of equipment, would you leave it uninsured? Absolutely not.
So here are the top 4 things that affect the price of your life insurance:
- Medical History
- Tobacco Usage
- Family Health History
- Job Duties
What Are Your Best Rates For Grading Contractors?
Now, keeping in mind that the price can vary significantly based on the above factors, lets take a look at what my average grading contractor client looks like and give you some examples on the actual price differences when we adjust the different factors.
Mr. Grading Company Owner is 56 Years Old and has a well established firm that employs approximately 30 people during his peak season. He no longer works I the field and spends most of his time working at his office communicating with clients and working on estimates. Outside of work, Mr. Grading Company Owner spends time with family and enjoys travelling to the beach and playing golf on occasion. From a health standpoint, he does not work out, but he attempts to eat some what healthy most of the time. He does not smoke does enjoy cold beer. Mr. Owner takes some blood pressure medication, but has no other health issues.
Let’s look at some different situations, and some of the estimated the prices you’ll be looking at:
Let’s say Mr. Owner gets a standard health rating for a 56 year old male. Here are the prices for $1,000,000 of coverage with some different options
- 10 Year Term:
- 20 Year Term:
Now let’s say Mr. Owner is a smoker and gets a smoker rating for a 56 year old male. Here are the prices for $1,000,000 of coverage:
- 10 Year Term:
- 20 Year Term:
Finally, let’s say Mr. Owner is a smoker, has some health issues, and some family medical history that makes him a higher risk. Here are some quotes for $1,000,000 with an increase risk rating
- 10 Year Term:
- 20 Year Term:
As you can see the ratings and prices vary. It's is easy for people to get caught up in the rating and the cost of the insurance and get cold feet into buying the protection. Try your best not to let this happen to you. If you have a need, you need the coverage. Think about it this way. A higher rating means you have a higher mortality risk and in effect a greater need for the coverage. This is why life insurance costs more for scuba divers, motorcycle racers, and rock climbers, but they still buy it because there is an increased risk. If things change for the better, if you quit smoking, lose weight, or stop racing motorcycles, we can reapply and get a rate reduction. That said, once you get approved, we will never come back and rerate you even if you contract a major illness.
Other Uses Of Life Insurance For Grading and Excavation Companies
Planning for business sucession is the biggest uses of life insurance for grading contractors, but there are many other uses that are also extremely useful to you as a business owner. Here are a few:
1. Personal Needs
- Personal Debt Protection
- Long Term Income Protection if Disabled
- Continued Income for Spouse and Children
- Paying For Children's Education
- Leaving A Legacy Gift
- Estate Planning
- Retirement Supplementation
2. Business Needs
- Business Succession Planning
- Key Person Protection
- Employee Retention and Benefits
- Employee and Executive Bonus Plans
- Business Debt Protection
- Strengthening of Balance Sheet
Over the next few weeks I will be outlining each of these and will hopefully give you a clearer understanding of all of the uses of life insurance for Grading Contractors. Stay Tuned!
Why Work With Aaron Peacock?
I'm am a top producing commercial insurance professional with licenses in property & casualty, workers compensation, life & disability, and group health insurance. I am an Appalachian State University alum currently living in Hickory North Carolina and my office is located in my alma mater's city of Boone North Carolina. I am considered an expert in designing policies for grading contractors and I insure many grading and excavation firms in the western half of the state. In addition to performing at a very high level in my role as my client's insurance partner I am also engaged to be married to my fiancé Anna, who is a kindergarten teacher and master chocolate chip cookie baker. I am a volunteer and proud supporter of Appalachian State's Walker College of Business where I have been asked to speak about relationship marketing & direct sales, personal productivity, career development, and personal finance to the students enrolled in the business school. In our spare time, Anna and I enjoy walking our dogs Sophie & Bruce, playing yard games and grilling out on our Big Green Egg, riding mountain bikes, and getting out on the water on some stand up paddle boards.
If you are ready, feel free to request a life insurance quote on this site – here's the link aaronpeacock.com/free-quote or call me at 828-434-3215 or email me at [email protected] It’s easy, fast, safe and always secure.