Numerous risks come with running a business. While purchasing life insurance can be pretty emotional, it’s also a smart financial decision to make as an entrepreneur.
We are implying that there’s more to life insurance than being able to guarantee the financial future of your loved ones. There’s also the value life insurance can offer you and your business.
The thing is, regardless of the size of your business, life insurance can be your ticket to being independent of bank loans, earning tax advantages, securing your human assets, and guaranteeing the continuity of your business.
You now see the big picture, but let’s make it simpler to understand. In this blog, we’ll look at three different use cases of life insurance for your business;
1. Funding Buy-Sell Agreements as a Sucession Plan
For most businesses, there’s always a troubling concern of what will happen at the demise of one of the business owners.
It’s about ensuring the continuity of business and ownership. More so, ensuring that the control of the business does not fall into the inexperienced hands of the heirs. While for the demised’s family, they are only interested in ensuring the family is financially secure.
These divided interests can be addressed with a buy-sell agreement put in place by business owners. In the event of the death of one of the business owners, the share of the dead owner is bought by the living owners.
There are different mediums through which the buy-sell agreements can be funded. One of the most innovative options is via life insurance. With the life insurance coverage, the fund is made available when death occurs; the death benefits are tax-free.
2.Attracting and Retaining The Best Hands and Brains
There’s always personnel that are critical to the success of your business. It could be a sales rep, engineer, or anyone valuable. What happens if they leave? It will take a lot of resources and effort to get things back on track without them.
We refer to the relationship, experience, and expertise in relation to how it affects your clients, team, and productivity.
That’s why the right thing to do is invest in key employee life insurance policies. This implies that when the key employee is lost, the policy provides your business with the financial support required to acquire a suitable replacement.
3. Executive Bonus Arrangement as an Incentive
This is more like a means to motivating your best assets. The executive bonus arrangement is quite similar to Key Employee life insurance; the difference lies in who is named the beneficiary.
This is an employer-financed life insurance policy where your employees name their beneficiaries. This time it’s not the company that is named as the beneficiary.
Businesses offer this life insurance option as a means of rewarding and recognizing the value of an employee.
It’s all about planning for a solid and secure future for your business. These three life insurance options are guaranteed ways of adding value to your business and your employees.