Life Insurance as a Financial Tool for Businesses

Life insurance is a key financial tool when planning for the next generation or protecting your business. Whether it’s to minimize taxation when passing on your estate or to protect your business from the impact of a sudden loss of a key person, life insurance can be a low-cost, tax-advantaged solution for you or your business.

Why Is Life Insurance Important for Your Business?

Life insurance has several applications for your business, including the following:

• Protecting the business. Life insurance can provide a safety net for your business if something happens to you. Life insurance provides funds to facilitate the transition of the business.
• Securing business loans. Lending institutions often require life insurance when securing loans. This ensures that their investment is protected if the owner unexpectedly passes away.
• Ensuring continuity at the death of key employees. Key person coverage provides the business funds to offset the potentially significant financial loss of losing a key contributor in the event of their untimely death.
• Facilitating business succession. Passing a business on to the next generation can come with significant tax liabilities. Life insurance provides tax-free funds to transition ownership to the next generation without liquidating assets.
• Funding buy/sell agreements. Business partners with buy/sell agreements often neglect to address how to fund the business's transition in the event of their death. Life insurance provides funds to ensure the business can be transitioned without financial strain, protecting both the buyer and the seller.

Additional Life Insurance Business Application: Executive Benefits

Because of the tax advantages life insurance is afforded, it is a valuable tool for businesses to use as part of their financial planning. Life insurance can play a role in recruiting, retaining and rewarding executives, or what’s more commonly known as “executive benefits.”

Executive benefits comprise programs and products that allow your company to offer best-in-class benefits. With today’s competitive environment for top-level executives, funding these programs can be challenging. Life insurance is a funding option that allows for full-cost recovery for the business, including loss use of funds. The Hylant Executive Benefits and Advanced Life Insurance team can assist your business with using life insurance in sophisticated business applications.

With careful planning, life insurance can effectively help you achieve your goals and safeguard the financial future of your loved ones. To learn about more ways to secure your legacy, click here.

The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.