80% of small business owners say their company is their most important family asset. But only 34% have strategies to protect the legacy they’ve invested their blood, sweat and tears in.1 Failing to plan for whatever happens next can put assets in jeopardy, trigger costly litigation and wreck families’ futures. On the other hand, building a firewall around your business with continuity and succession plans positions you to:
growth opportunities by securing favorable financing.
liquidity and manage risk after the death of principal.
smooth operational transition after the death of a key employee.
fair value to heirs by equalizing inheritances.
Four hypotheticals describe how business owners use life insurance to manage risk, fund growth, build resilience and protect families?
Replace an Irreplaceable Employee
Secure Financing at Favorable Terms
Keep the Business Intact and in the Family
Invest a Little. Save a Lot.
-- 2Annuity.org. Life Insurance Strategies for Business Owners.
Few people want to talk about business life insurance, think about it or do anything else about it. Leveraging it proactively, however, is a low-cost, high-value asset to manage risk by funding:
Are you prepared for the premature death of an essential staffer, say your senior account manager. How many clients will you lose before you can hire a qualified replacement, get that person up to speed … and how much will that cost. Insuring that person’s life provides a tax-free cash infusion that preserves liquidity during the transition.
Business life insurance can be used to secure long-term, fixed maturity loans for capital expenditures, to refinance existing debt, purchase equipment and more. 70% of Small Business Administration-backed 7(a) loans are for amounts of $350,000 or less.
In the event of a principal’s death, the beneficiaries receive a tax-free death benefit that can be used per the terms of the agreement. Typically, those terms may allow them to either 1) purchase the late partner’s share of the company or 2) accept the cash as a buy-out. In either case, a properly funded buy-sell is essential to protecting company assets.
If, for instance, one heir is interested in continuing the business but the others are not, the owner can leave the business to the one and take out policies equal to the value of the business for the others.
Leveraging business life insurance to finance growth, continuity and succession plans ensures smooth transitions, protects assets and mitigates risk.
Partnership Buy-Sell Agreements
Sole Proprietor Buy-Sell Agreements
Key Employee Coverage
Estate Equalization
Realm Health 4 Life™ is an operating division of Realm Health, the leading healthcare insurance agency in the small- and medium-sized transportation sector. Based on unique insights gained from relationships with more than 1,000 owners in this space, we found an unmet need for a strategic asset to preserve their businesses and protect their families.
Is life insurance right for you and your business?
Call now for your confidential, no-obligation executive consultation with a Chartered Financial Consultant (ChFC) to find out.
(877) 787-2999
We will respond to your questions within 24 hours.