Starting a business is a labor of love, not a play for money. Most entrepreneurs have a desire to build something that will be of value to the world, not a desire to build something the world will give value to.
Unfortunately, many small businesses fail to achieve any sense of value or success. Sometimes this is the fault of a struggling economy or poor market conditions, but sometimes it’s the fault of poor planning. Innovative and insightful use of financial tools may be enough to protect your business from life’s “what ifs.”
Life insurance may be used to help with protection against the unexpected – it can help enhance your ability to reach your dream for the future. The benefit provided by a life insurance policy can be used to build relationships with key contributors in your organization and retain their experience, which is a critical component of your success. This means that the business is the owner and beneficiary of the life insurance policy on the life of the key employee. The purpose is to indemnify the business in the event of the death of the employee and to protect them from the financial loss they would incur. The money from the death benefit might also be used to hire and train someone new, and/or create incentive bonuses for sales teams to make up the loss.
You built your business to be a source of value, now is the time to review the financial tools that can help provide further enrichment. There are ways to financially incent your most important employees. These incentives include providing deferred compensation, salary continuation and section 162 bonuses.
*Insurance products and services are offered through Prudent Financial Group, LLC.