I’ve been writing about individual business and wealth protection solutions and have been asked to address the bigger picture for business owners. Given this, I thought it would be interesting to get you thinking about your business the way I view it. That is, how can you protect your business, employees, and lifestyle with the help of insurance products?
If a key employee dies, is disabled, or resigns would your business be as successful as it is today? This is where you need to consider key employee benefits and protection. This includes buy-sell and business transfer strategies, key employee enefits, and key person protection.
Buy sell strategies include a formal agreement between business owners, family m members, key employees, or other third parties that keeps your business going in the event of an owner’s death, disability, or retirement. In this case, life and disability buy-out insurance can help reduce the financial strain on remaining owners.
Key employee benefits are a means to recruit, reward, retain and retire people whose performance most affects the success of your business – key employees. By helping them, offering these plans can provide additional benefits to help them make up for benefits lost due to government restrictions put on qualified retirement plans. These programs lead to more engaged and loyal employees with the added value of being a great recruiting tool!
Key person protection – is a means to protect the integrity, cash flow, and ongoing success of your business from losing a key employee due to death, disability, or termination of employment. Key person insurance helps the company overcome additional expenses associated with recruiting and training a replacement.
Employee Protection
Whether we like it or not, offering employees retirement and group insurance benefits that they’ve come to expect to stay competitive is essential. In many states providing retirement plans for businesses of specific sizes is mandatory! There are numerous options to choose from.
Qualified retirement plans include 401(k)s, traditional defined benefits, and employee stock ownership plans.
Group benefits are a little harder to manage because the size of your group impacts benefits choice and costs. Benefits such as dental, disability, life, vision, and critical illness must be tailored to meet your business’s needs. To control costs, you can then choose to pay all, part, or none of your employees’ benefits – though the more you pay, the more likely you are to recruit and retain the best people.
Key employee retirement benefits are additional plans that can be an added perk for your most valued people. These can include bonuses and deferred compensation plans.
Lifestyle Protection
In addition to the needs of the business, business owners seek to maintain the lifestyles they and their loved ones have come to know. This could include looking at retirement years, the legacy they want to leave, and protecting loved ones if they die or become disabled.
Business owner strategies start with an analysis of the value of your business, personal savings, and any transition plans you have in place.
Protecting your income – disability insurance protects your income against life’s uncertainties so you can avoid dipping into savings or retirement assets when you cannot work. Individual disability income insurance can help replace a portion of your income due to a prolonged illness or injury.
Life insurance to help protect yourself and your family is available in many shapes and sizes to fit your unique needs and budget. Benefits include cash values and even death benefits if you are diagnosed with a chronic illness. With the right plan, you can feel comfortable that your family/heirs can maintain their standard of living before and after a death or severe illness.
Legacy and estate planning help ensure personal and business assets meet your lifetime objectives and are distributed the way you want. You can also take advantage of tax benefits provided by 529 plans to help fund your children’s and/or grandchildren’s education.
No matter what is essential to you, some solutions can help you protect your business, employees, and lifestyle customized to your unique situation and budget. Please let me know your questions or what I can help with below!
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- Five Steps to Create a Flexible and lasting financial plan for You and your business - May 9, 2023