Business Owners: 11 Reasons Why Life Insurance Doesn’t Suck

  1. You have a key employee that dies and you need to find a replacement in a hurry. There will inevitably be ramp up time and extra costs in getting him acclimated. And, you might have to overpay because you need an employee in a hurry. Life insurance on your deceased key employee will help defray that expense of the new hire. [spacer height=”20px”]
  2. It can reimburse you for money you paid out in a non-qualified deferred compensation plan to a key employee.[spacer height=”20px”]
  3. It can redeem stock of a deceased shareholder, so you avoid creating a large liability on the books of a corporation.[spacer height=”20px”]
  4. A shareholder buys the shares of a deceased shareholder (instead of the corporation) so the buyer gets a step up in basis, and reduce capital gains tax on a future sale of stock.[spacer height=”20px”]
  5. You need to keep a key employee. A life insurance policy can build up a cash benefit for him when he retires, and also pay a benefit to his spouses when he passes away.[spacer height=”20px”]
  6. You maxed out your 401(k) contributions, and this is another way to get tax-deferred growth on your assets.[spacer height=”20px”]
  7. You are in a second marriage and you want to make sure your business goes to your children, but you have to provide for your spouse. A life insurance policy will pay your spouse while you can then leave the business to your kids.[spacer height=”20px”]
  8. It keeps you competitive in market where your competitors are offering life insurance to their key employees.[spacer height=”20px”]
  9. It can be used as collateral for bank or other loans, and equity investments.[spacer height=”20px”]
  10. If you have a cash policy, it can help tide you over during lean times, such as late paying clients, loss of a key client, even paying for equipment upgrades without taking out bank financing.[spacer height=”20px”]
  11. It uses a cash-value, so you don’t have to worry about a loan qualification, credit scores or paying bank interest rates. This is especially important in risky industries where interest rates on loans can be very high.

Questions on how life insurance might be used in your business or estate plan?  Call me 248-455-6500 and or email me agoldberg@confidenceandclarity.com, and we can talk

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