 |
Key people in a business (owners and executives) expend considerable time and effort to build their expertise, knowledge and reputation. When a key person dies, the business looses an important member of the management team, and the aftermath (lenders cutting credit, creditors looking for payment, debtors delaying payment, and general loss of confidence, etc.) can have a severe financial impact.
Key Person Insurance provides assurance to a small business's creditors and employees that the business will continue even if a key person dies. This life insurance provides immediate cash to cover working capital needs and to find & train a replacement for the person that has died.
It can be difficult for a small business to obtain adequate financing. Creditors will often require a business owner to personally guarantee a loan.
The solution is Business Loan Protection Insurance: life insurance on the business owners or other key persons in the business. The proceeds are tax-free and may be used to pay down business debts, as well as providing confidence for creditors.
Business Succession is a key component of any business plan, but when it is unexpected, as in the death of a business owner, the financial burden on the remaining owner(s) to fund the purchase of the owner's share can be considerable. Life insurance is generally a good way to fund the obligation of a buy / sell agreement when a shareholder dies.
|
|