Area's of Interest
Business Succession:
Buy-Sell Agreement Overview
Business Insurance at a Glance
What Is Business Insurance?
"Business insurance" is the term used in the insurance industry to describe the use of life insurance and disability income insurance to solve certain financial needs of businesses and business owners.
Business insurance can help to address these needs of a business owner using insurance products—
economic loss to the business when a key employee dies,
disposition of a business owner's interest upon death or other separation from the business,
attraction and retention of valuable employees, and
rewarding faithful employees.
Have Questions? Get them answered below.
What Is Key Employee Life Insurance?
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Group Life Insurance
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Key Employee Life Insurance
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Split Dollar Insurance
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Disability Income
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Disability Buyout
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Tax-Deductible Retirement Planning
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Personal Estate Planning with Corporate Dollars
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Salary Continuation
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Business Debt Liquidation
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Personal Life Insurance
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Business Mortgage Insurance
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IRC Section 162 Bonus
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Group Long Term Care
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Business Overhead Expense Insurance
Key Employee Life Insurance
Nearly every business has key employees who are critical to the overall success and profitability of the business. Key employee life insurance is insurance owned by the business on the life of a key employee, purchased to help reimburse an employer for the economic loss caused by the death of the employee. As such, key employee life insurance is not a specific type of life insurance policy; rather, it is an effective way for a business entity to use life insurance.
Typical Key Employees
A key employee is anyone in whom the business is deemed to have an insurable interest, usually based upon the employee's impact on the financial success of a business. Smaller companies tend to have a greater need for key employee insurance since they do not have a pool of employees from which to select a replacement if a key employee dies. Further, the success of a smaller business can be directly attributed to the vital contributions of a few individuals. In general, a key employee can be anyone who—
is responsible for management decisions,
is highly paid,
has a significant impact on sales, or
has a special rapport with customers and creditors.
The Purpose of Key Employee Life Insurance
The purpose of key employee insurance is to help protect a business from economic losses that can occur when a key employee dies.
If you are interested in learning more about any of the area's of interest please contact us
What Is a Buy-Sell Agreement?
When a business owner dies, the disposition of his or her business interest can become a two-edged sword, creating problems for the business owner's heirs as well as the business itself. Critical questions must be answered:
Who will purchase the business interest?
What is a fair price?
When will the sale be made?
Where will the funds come from?
This "disposition dilemma" is easily resolved when a buy-sell agreement is established. This agreement provides that:
someone (e.g., the business entity, the surviving owners, or a key employee) will purchase a deceased owner's interest at an agreed-upon price; and
the deceased owner's estate is obligated to sell the interest at that price.
The benefits of Funding through Life Insurance
1. Protect your business if your partner passes
2. Can fund it in a way as to create retirement assets
3. Ensures that the busness continues operations
4. Ensures that the employees have their jobs
5. Ensures business operations are uninterrupted
6. Ensures clean and smooth transfer of ownership
7. Ensures customers and vendors are more readily obtained and retained
8. Ensures partners burden is relieved
9. Ensures deceased family is protected and recieves full value of business
10. Ensures that the partner recieves full payment promptly
11. Ensures that your business continues after your death and your heirs recieve the proceeds of the sale of the business promptly and tax free.
12. Employees are liekly to feel more secure and continue to produce at a high level