I come from a family of small business owners, and I’ve seen the challenges that they face daily. For them, and for many small business owners, strategizing for their financial future is not top of mind.
If you’re a small business owner, you know it’s not easy, but you also know the great pride and satisfaction that is derived from running a successful business. An important key to long-term success is having a team of professionals to help you prep for the future.
CPAs and attorneys are great resources who bring value to your business, but a trusted financial professional should also be part of your team. They can provide answers to the challenges your business will face on the way to thriving today and well into the future. Life insurance, a time-tested product, can often be the solution to your concerns for the future, such as:
- The negative impact losing a key employee could have on the success of your business
- Your unexpected death or disability
- Maximizing the tax advantages of owning your small business
- Offering competitive benefits to your employees and retaining key employees
These concerns are all valid and keep many business owners up at night. After all, you probably consider yourself an average person, but you’re really not. You had a dream and took a chance. You’re agile and willing to adapt to change. You know what you do best and leverage that into a great customer experience. You’re good at running your business today. But you don’t have the time, or you struggle, with the “what ifs.” And, that’s where a strategy utilizing the benefits of life insurance can contribute to the long term success of your business.
Here are three key ways that life insurance, when properly structured, could be a viable solution.
- It can help fund the future sale of your business, or the purchase of a co-owner’s interest, in the event of retirement, death, or choosing to leave the business, in a tax-efficient manner. It also provides protection for your family.
- It can provide many tax-advantaged ways to reward your most important employees, increase their loyalty and retain their services for the long term. This can be done via strategies such as Executive Bonus plans, Deferred Compensation plans and Split-Dollar arrangements.
- If you own a family business, life insurance can also provide estate equalization for your heirs, ensuring fair distribution of your assets when you die. The death benefit will provide the cash to offset otherwise unequal shares of your assets, for instance, for a child or children who do not wish to be involved with your business after your death.
Having life insurance as part of your long-term strategy can provide significant advantages. Unfortunately, 40% of business owners don’t have life insurance, and 50% of businesses are under-insured because they don’t think their business has value, don’t know how to find out, or just don’t have the resources to do so.*
If you’re one of these business owners, it’s not too late to get started. Get in touch with a financial professional who can prepare you and your business from whatever challenges come your way.
*What’s Your Business Worth, ©Michael M. Carter, Daniel Priestly, Scott Gabehart, 2016
This post is for informational purposes only and should not be considered as specific financial, legal or tax advice. Depending on your individual circumstances, the strategies discussed in this presentation may not be appropriate for your situation. The information in this material is not intended as tax or legal advice. Always consult your legal or tax professionals for specific information regarding your individual situation.