Life insurance for your family, life insurance for your business
Most people view life insurance as a necessity for their family but they don’t always view it as a necessity for their business. Learn why having life insurance can solve issues with buy-sell agreements, key employee retention, and is an essential part of planning for the future of your business. We work with local Estate Attorneys to button-up both your family and your business.
Funding a Buy-Sell Agreement with Life Insurance
Life insurance is commonly used as a tool to provide funding for a buy-sell agreement between two or more partners in a company. Example: Owner “1” and Owner “2” are 50/50 partners in a business. The business is valued at $1,000,000. They each buy a $500,000 life insurance policy on one another through the business. In the event that one of the owners passes away, the life insurance would be paid to the deceased partner’s family or estate, and the remaining owner would control 100% of the business.
Key PERSON Retention Policy
A Key Person Life Insurance Policy is a unique way to retain and protect your business. It utilizes the cash value portion of a whole-life insurance policy and it can benefit the business in three ways. First, it can be set-up as a bonus mechanism to pay a key employee set bonus payments every few years or a lump sum at the end of a specified period of time. These bonuses act as an incentive to retain key employees and prevent losing them to a competitor. Second, in the event that a key employee passes away, it would pay a benefit to the employee’s family and help recruit a new employee with a signing bonus. Lastly, if the key employee leaves they forfeit the right to the cash bonus which can be used to recruit a new employee and offer a signing bonus.