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Robert A. Imparato, Jr CFP®
CERTIFIED FINANCIAL PLANNER™ professional
Craig A. Hyldahl CFP®
CERTIFIED FINANCIAL PLANNER™ professional
R.I.C.H. Planning Group, LLC
105 Fieldcrest Avenue, Suite #507
Edison, NJ 08837
Robert: 732-326-5240
Craig: 732-326-5241
Fax: 732-326-5331
Robert: robert@richplanninggroup.com
Craig: craig@richplanninggroup.com
Website: www.richplanninggroup.com
September/October 2018
Life Insurance Uses for Business
As a business owner, you may think of life insurance as an important offering in a total employee benefits package, which may help you attract and retain talented employees. But life insurance can do so much more, from helping to protect your company financially when a key employee dies to helping to fund the sale or transfer of your business. Take a look at some business uses of life insurance:
Key Person Life
Imagine what the loss of a co-owner who was the face of your company means to your business financially. Or picture the death of a key salesperson or researcher, who made outsized contributions to your business, and the impact on your company’s sales receipts and profits. Key person life insurance is a cost-effective way to defray all or a portion of the resulting financial loss after the death of a vital employee.Buy-Sell Funding
Life insurance is also a cost-effective way to fund a buy-sell agreement that provides for the orderly transition of the business in the event of disability or death.There are different ways to use life insurance to accomplish this transfer. The business can purchase policies on the lives of the business owner(s), with the business as beneficiary. Or if the company has a cross-purchase agreement in place, where each owner agrees to purchase the shares if another owner dies or becomes disabled, each owner can purchase and become the beneficiary of life insurance policies on the other owners.
Employee Retention Tool
Permanent life insurance is one way companies can use “golden handcuffs,” a way to attract and contractually retain key employees for at least a specified timeframe by offering a financial incentive.Several options are available, namely: executive bonus plans, split dollar plans and nonqualified deferred compensation. The plans differ significantly with respect to life insurance policy ownership and tax consequences. However, it is common that the objectives of both the employer and employee can be met under one of these designs.
You’ll want to consult an attorney experienced with business arrangements like these, and talk to a financial professional before proceeding.
GE 2141123 (6/18)(Exp 6/20)
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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services.
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