Protecting your Business?

Business Life insurance is perhaps one of the most overlooked items in the portfolios I review.  For whatever reason, small business people tend to ignore the fact that something could happen to one of the lives in the organization.  For a small business person, even the loss of a receptionist could mean disaster for that business.  Knowing this made me realize, that business insurance agents are not having the discussion.  In an effort to spread the word, I’ve come up 5 reasons your business should purchase life insurance.  On the other hand, someone could have already had this discussion, but you didn't listen the first time. 

Here's the plain and simple truth.  If you can afford life insurance for your business, get it!  If you're a small business person, your life insurance does double duty.     For sole proprietors and family owned businesses, life insurance can be used to payoff business debt while providing extra income to leave for your family.  For some reason, business people ignore this.  Oh well, let's talk about a few business reasons to buy life insurance for your business.

 

Keyman Life Insurance 

The loss of your executive assistant, a project lead, or person vital to your business could be devastating.  What if your lead person were to die prematurely?  Have you considered the costs associated with recruiting, hiring, and training your key employee?  Could your business continue the same without that person?  That person could be you. Would your vendors continue working with your company if you were to die prematurely?  If you value your business’ continuation,insuring the key employee  through life insurance is a good way to insure your business’ future success.
 
 

Deferred Compensation 

Many times, the cost of recruiting and hiring top level talent make it very difficult for smaller businesses to compete with larger companies.  Let’s face it, top level talent require’s top level benefits.  A business could use life insurance to guaranty a payments at retirement.  This could allow an employee to remain at a lower tax bracket and provide life insurance for his family at the same time.  At the same time, using life insurance as deferred compensation has a way of levelling the playing field, enabling businesses to recruit and retain high level employees.
 

Executive Bonus Plans

Aside from the normal group life insurance policy that companies provide, the executive bonus plan is a way in which a business provides personal life insurance for an employee.  The life insurance is treated and taxed as a bonus.  This enables the company a method of paying for an executive’s personal life insurance; giving the executive high levels of life insurance with little or no personal money out of pocket.
 

Business Perpetuation

If you’ve worked hard to build your business.  Do you have a staff that depends on your leadership and guidance?   What happens to your business after your death?  Do you have liabilities that need to be paid?  Are you a co-owner with a business partner?  Business continuation requires planning with the right professionals.  You should work closely with your attorney and tax consultant to plan to best plan for your business. 

Life insurance can be used for your business to fund all types of business continuation requirements. Whether you need a buy-sell agreement between two partners or a cross-purchase plan for several owners and investors; life insurance can be used to provide cash can to assist with orderly, the impact following the death of a business owner or key employee.