|
|
Budget Rates Life Insurance |
Life Insurance in a Business Setting
by Richard A. Eisenberg, CLU, ChFC
For owners of businesses large and small, life insurance is a flexible way of providing instant assets at exactly the time they are needed. Here are some examples.
Key Person Insurance
If an employee is important to a company's profits, or critical to its operations, this type of insurance can be crucial. This is especially true if this employee would be very difficult to replace. Life insurance proceeds can provide a buffer against reduced profitability, as well as a source of funds to hire and develop a replacement
Funding Buy-Sell Agreements
When two or more people own a company, there may be an agreement to buy the ownership of a deceased owner. Life insurance can provide liquidity for the buyout requirements.Deferred Compensation
Many businesses use life insurance to fund the death benefit and living benefits of a deferred compensation plan. Key employees are chosen who are very important to the company. An agreement is written whereby, if the employee stays with the company for a number of years, an additional pension is paid to the empmloyee. Should the employee die before retirement, a death benefit is paid to the family.Richard A. Eisenberg is a Chartered Life Underwriter and Chartered Financial Consultant. He has been in business since 1970. You may contact him at raeclu@aol.com.