Life insurance for your business

Life Insurance for Your Business

If you’re not physically present to protect your business, who is? In the latest Street Smarts with Taayla video, I explain your options that allow you to protect your business by using life insurance.

Financial planners are always considering the possible risks to your business, and assessing how to best manage those risks with insurance. Here’s how life insurance can serve as a solution, in four ways.

“Key Man” Insurance

This is important in the case that your key person is not able to be there for your business, and their absence affects productivity and profit margins. This insurance covers the key man whether it’s you, the business owner, or your valuable employee or employees? Life insurance on this crucial person or persons will help cover the loss of revenue as well as the cost to re-train a replacement worker.

Securing Bank Credit

In many cases, banks require the principal of the company to be covered with life insurance to secure a loan. This is like key man insurance –but from the bank’s perspective.

Funding for A Buy-Sell Agreement

A buy-sell agreement, otherwise known as a buyout agreement, is a legal written document stating how its stakeholders are to conclude business in the event of death or a leave of absence. When death occurs to one of the partners or shareholders there is usually a typical need for immediate cash to fulfill the terms of the buy-sell agreement. This is when a life insurance policy comes into play.

Funding for Tax Liability

Death and taxes are unavoidable and usually go hand-in hand. In business, there are many ways that taxes can take a toll on more than you can imagine. It is recommended that you consult with a tax accountant to work out the numbers, and then place life insurance on the members of the business with their expected tax obligations. In setting up this contract, it is common to use the company as the owner and beneficiary of the policy, however it is not necessary.

There is so much more to learn and consider in the organization and protection of your establishment, and in this video we’ve only uncovered the tip of the iceberg. Keep an eye out for more videos to come! One of the best things about using life insurance to protect your business is that life insurance policies are usually paid out within two weeks after the claims requirements are met. That will also alleviate the need to liquidate assets in an already stressful situation.

I’d love to hear your feedback, or if you have a similar story, please share with us in the comments below! I will do my best to help support you through it. Please like and share this video, and subscribe to our channel: Engrace Financial Solutions, financial success made simple.