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Business Life Insurance

Life insurance is not only an important component of a personal financial plan Life insurance provides a solid financial foundation and serves as a versatile tool for businesses of all sizes. Business owners can effectively use life insurance to fund important and vital business arrangements, such as buy and sell and deferred compensation agreements. These are only two examples of where life insurance helps to provide the assurance to the success of an ongoing concern or to guarantee that families will not face financial hardship.

Just imagine a few of the benefits you, your family and business partners would gain with a well thought out strategy using life insurance as a funding mechanism in your business financial plan:

  • Assures orderly transfer of the business upon death of a business owner.
  • Prevents conflict and disputes with surviving owners.
  • Assures a fair price for the business.
  • May set the value of your business for federal estate tax purposes.
  • Can provide cash for your estate.
  • Allows you to maintain control of the business.
  • Prevents disputes with family members.
  • Provides an income tax-free death benefit to purchase shares of the business.

Business Owners Can Use Life Insurance to fund the following business continuation arrangements:

  • Buy-Sell Plan: Is often the cornerstone of a business’s succession plan. Life insurance and disability income insurance policies provide immediate funding for the sale of a business when a specified event happens such as the death or retirement of a business owner.
  • 162 Executive Bonus Plan: Is a simple, yet powerful way for business owners or companies to provide additional supplemental benefits for key employees or executives of their choice.
  • Family Business Planning: Uses life insurance as an excellent way to equalize the amount of assets distributed to the business owner’s children, thereby preventing disputes and conflicts.
  • Person Business Bank or Collateral: The life insurance death benefits or cash buildup may be used for those purposes.
  • Key Person Insurance: Allows business owners to use life insurance proceeds to cover many business expenses that arise upon the death of a key person such as a stakeholder or individuals who possesses unique abilities essential to the continued success of a business.
  • Retirement Plans: Offers a group retirement plan or individual retirement plan to help you or your employees save for retirement. Permanent life insurance can be a valuable key component.
  • Split-Dollar Insurance: Brings together the life insurance needs of one person with the premium-paying ability of another. Split-dollar life insurance plans are flexible and can be tailored to meet a variety of tax and business planning needs.
  • Supplemental Executive Retirement Plan {SERP): Provides tailored retirement benefits for highly compensated individuals. A SERP enables you to place “golden handcuffs” on your most valuable employees by offering them an incentive that is too good from which to walk away.
  • Section 303 Stock Redemption Strategy: A special type of stock redemption plan that can provide cash to the estate of a deceased shareholder in a tax-favored manner. Allows a corporation to redeem a deceased shareholder’s stock without incurring income taxable dividends.

EBA is here to help, call today!

EBA specializes in the design and implementation of dynamic cost-effective employee benefits programs and HR support systems for small and medium-sized businesses and organizations.

Business hours:
Mon – Fri: 9AM – 7PM

Office: 703-570-1969
Mobile: 240-423-8682
Fax: 703-574-8911

EBA is a proud member of the National Association of Health Underwriters (NAHU) and, the Society for Human Resource Management (SHRM) compliance groups. Continuous educations keeps us up to date on health reform and employee benefits.

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