Planning for the Future
There is perhaps no better financial product for long-term planning than life insurance. Life and business are both full of unexpected, and wise business owners should be as well-prepared as they can be for any possibility. There are several ways life insurance can help.
A life insurance policy is often the cornerstone of a business's succession plan. The business uses life insurance to fund a buy-sell agreement, allowing surviving partners to purchase a deceased partner’s share of the business from their estate. In this way, surviving spouses and heirs receive their share of the business, and the living partner(s) maintain control of the business. Buy-sell agreements can reduce conflict and allow the business to keep running smoothly.
Often times, business owners will have several adult children who may have varying degrees of interest and involvement in the family business. Life insurance provides the solution by creating an additional asset that can be used in multigenerational balancing act.
The tax-free growth of life insurance cash value is an attractive benefit to most companies, and one reason why banks and corporations fund permanent insurance policies. Cash value accounts grow tax-free while within the policy.
Cash Flow Management
The ability to borrow against cash value in lean times or when emergencies arise is a key feature of life insurance policies. Too often, small business owners, especially those operating out of the home with low overhead, assume they have little need for emergency savings in their business.
Financing Capital Expenditures
Another way that life insurance helps cash flow management is by improving the credit-worthiness of a business owner, or even the corporation itself. While the policy-owner (an individual or a corporation) can always borrow against their cash value directly from the life insurance company, a policy’s cash value can also be used to obtain loans at preferred rates from a bank.
Providing Employee Benefits
The top problem identified by small business owners is finding (and keeping) the right employees. An attractive benefit package can help a business secure and keep top talent. Life insurance can be used to fund employee benefits in various ways, thus helping business owners attract and retain high-quality employees.
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We're here to help you face any financial challenges that threaten your small business. When you want to consult with one of our expert, we're here to help. Contact CBIZ Life Insurance Solutions to learn more.