FUTURE BUSINESS PLANNING
Planning for your business' future: The day-to-day running of your business consumes a great deal of your time and energy. In spite of the daily pressures of your business operation, it's also important to plan for your business' future. It can come as quickly as tomorrow, and your business needs a plan to ensure that key issues are addressed to secure its longevity. Several issues to consider involve risk management and business continuation plans. Insurance plays an important role in helping you and your company to address issues that could impact the future of your business. To discuss your needs and concerns with a trusted associate, email, call or visit us. It's never too early to start planning.
Risk Management: There are a variety of situations where insurance can be a tool to help companies manage risk, some examples are listed below:
* If certain key employees, including the owner or others, have knowledge or talents that are significant to the company's financial success, you may want to consider having life insurance or disability insurance on these employees that would provide a funding source to stabilize profits if something should happen. This would allow the company time to restructure or hire new talent to replace the loss to the organization.
* If an owner was to die, his or her heirs could be faced with significant estate taxes. To ensure that their financial concerns don't destabilize your company's future, you may want to consider purchasing life insurance that would pay these obligations.
* The same also applies in the event of disability especially if an owner's activity directly impacts revenues. In such cases, disability insurance can provide solutions that would provide a cash flow to help stabilize the business.
Business continuation plan & buy/sell agreements: What happens to your company if an owner dies? This issue is important to businesses of all sizes. The death of an owner can have serious financial consequences for heirs or partners involving estate taxes and other obligations. Without proper planning, stakeholders in a company could find themselves without the funds necessary to purchase the decedent's portion of the company, resulting in a situation that could threaten the future of the business impacting owners, employees and their families.
Working with legal counsel, business owners can create an agreement outlining how their interests would be bought out upon their death. In many cases, the purchase price is often so substantial that surviving owners or other designated buyers would not have or be able to raise the money on their own. Life insurance closes the gap as a funding mechanism for the purchase. In this case, owners would purchase life insurance policies on each other, and upon the owners death, they would receive the funds necessary to purchase the company.
Similar arrangements can be drawn up to cover other situations, including retirement or disability of an owner, using either life insurance that would build a cash value which can be borrowed or disability insurance that would pay funds in the event that an owner becomes disabled.
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