Financial Confidence | Insurance Planning
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Insurance Planning

Insurance Planning for Business Owners

Business Continuity With Insurance Planning

Insurance planning involves the purchase of appropriate protection in the accumulation objectives of a client’s living estate. Insurance planning for protection affects the achievement of accumulation objectives by:

 

1. Protecting against the loss of the earning potential of human capital because of death or disability and thus the elimination or reduction of income from work.

2. Protecting against the loss of personal and financial assets caused by a variety of property-related perils such as fire, theft, explosion and collision and/or legal liability.

3. Protecting against substantial expenses such as those caused by judgements and defense costs associated with legal liability, and

4. Increasing expenses to pay for insurance premiums and thereby reducing the amount of income available for accumulation objectives.

 

Successful owners are usually optimistic people, somewhat averse to dwelling on the more unpleasant aspects of business. Contemplating one’s demise certainly qualifies as an unpleasant aspect. However, it is important that you prepare well in advance to take care of business now – for it to continue successfully without you.

Why Insurance Planning?

Ownership transition issues can be solved with insurance planning to prevent:

  • Loss of business continuity
  • Loss of financial resources for the company
  • Loss of key talent, including the owner
  • Loss of employees and customers

Business Continuity Planning

Business continuity planning includes the following:

  • Business insurance for continuity planning
  • Stay bonus plan
  • Business continuity guidelines
  • Buy-sell (shareholder) agreement
  • Wage (salary) continuation plan
  • Retaining key employees after death or disability
  • Plan for financial independence of company

Business Continuity With Life Insurance

Key person life insurance should be part of a business continuity strategy. It can provide the business with tax-free funds when needed to help:

  • Find and train a new person to assume the key person’s role
  • Assure customers that the business will continue as a viable entity
  • Assure creditors that funds will be available to meet commitments
  • Offset expected reductions in sales revenue (after-tax)
  • Pay a death benefit in recognition of the deceased employee’s service to the surviving spouse, other family members or the estate (up to $10,000 may be received tax-free)

Structured Approach to Business Continuity

In the long run, a successful business is one you can either sell for top dollar and exit in style, or one that can survive with your exit. We can work together to design and finalize the recommendations to help you to reach your objectives. Download more info about the Financial Confidence™ business continuity solutions.