Solutions Life Insurance Creates for Small Business Business Owners
Life insurance has many uses for the small business owner
There are many uses life insurance has for the small business owner. It is likely there are many moving parts to both your business and personal finances.
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There are exceptions but we generally recommend that many of the following life insurance strategies be discussed and implemented as part of a comprehensive strategy that involves other tax and legal advisors in order to achieve maximum efficiency.
We understand that as a small business owner, you have risked everything to get where you are and we do not take our responsibility lightly in providing you with the most thorough advise on your overall insurance strategy to protect your family, your employees and your ability to keep your small business profitable.
The following are a number of life insurance strategies that can help you achieve your financial goals.
Life insurance on your own life – You’re likely a key employee to your company. If you were to die, the business would suffer. If anyone depends on your ability to work your business such as your family members or employees, you will want to have life insurance on your own life. The death benefit life insurance would provide will help your family continue to live their lives without having to worry about money.
It can also be structured to help your employees continue to earn a living as the business searches for a new leader. The death of a business owner can cause a business without a succession plan in place to fall apart as customers, creditors, suppliers and other stakeholders tend to look for new solutions when there is a great deal of uncertainty surrounding any small business.
As you plan your estate, you may have a family member who will take over your business but another who will not that you want to provide with an equal amount of inheritance.Finally, cash value life insurance policies can be used to safely store cash in a tax efficient manner that is also protected from creditors and lawsuits. This way, if anything happens you have cash available you can get your hands on and if not, the money can be used to create an income in retirement.
Protecting the business with Key-Person life insurance – Many small business owners depend on the efforts of others. Just as a business would face many difficulties if the owner dies, the loss of a key employee due to an untimely death can be equally as hard. Life insurance owned by the business of the lives of key employees can provide money to help a business deal with the transition of losing a key person. Learn More About Key Person Life Insurance
Provide the money to buy-out a deceased partner – Buy-sell agreements are contracts business partners create in order to plan for the possibility the death, disability or retirement of each other. In order for the contract to be executed, money must be available, and the income tax free life insurance death benefit proceeds is the most efficient solution to create that cash when it is needed. Learn More About Buy-Sell Agreements
Non-Qualified Retirement and Compensation Plans – Key employees may leave an organization for a number of reasons. Sometimes, it is just because they do not feel the company values their service. Other times it might be because a competitor offers them more compensation.
Life insurance can be used to structure non-qualified retirement and other compensation plans that are used to attract, reward and retain key employees of an organization. Learn More About Non-Qualified Retirement Plans
Provide cost effective benefits to all employees – As part of a group benefits plan, offering group life insurance to all employees is a tax-efficient way to compensate them while giving them life insurance coverage they otherwise may not have. The premiums you pay as a small business owner are 100% tax deductible and the death benefit settlement their beneficiaries receive if they pass away while on your group life insurance plan are 100% income tax free. Learn More About Group Benefits
There are many uses of life insurance to protect a small business and our mission is to help you understand and structure them in order to help your business be in the best possible position to be both profitable today and succeed long-term.