You may already have insurance to help support your family financially if you should pass away.
But, could your small business benefit from additional life insurance that would protect your employees, business partners, and their families?
This week, Craig Siminski, of CMS Retirement Income Planning, shares an article exploring how life insurance might help small businesses attract and retain talent, or fund buy-sell agreements.
Here are three life insurance strategies that could play a role in your business:
Small businesses have a hard time competing for qualified workers, many of whom may expect group life insurance as part of a standard benefits package. One cost-effective way to recruit and retain top talent is to provide a group term policy that provides a death benefit for the employees’ beneficiaries.
With group policies, the premiums may be employer-paid, employee-paid (voluntary), or a combination of the two. If the company pays some or all of the premiums, it may be possible to deduct the policy costs as a business expense.
As an incentive for critical employees, consider funding an executive bonus plan with cash-value life insurance. The business pays the life insurance premiums with bonuses that are tax deductible to the employer but taxable to employees. The company determines the amount of each bonus and when to pay it. A bonus plan may also be designed with vesting requirements that make the life insurance policy more valuable for an employee who remains with the company.
The employee owns the policy and bears the responsibility for keeping it in force. He or she can borrow against, and sometimes withdraw from, the cash value for any purpose; and if the policy is in force at the time of death, the employee’s named beneficiaries will receive the death benefit, minus…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 21 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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