David Lerner Associates: Life Insurance for Small Business Owners
Nothing in this life is certain except death and taxes. When a small business owner passes away, it can be the center of turmoil and instability. It raises many issues, including personal loss, but it also raises pragmatic questions involving the replacement of a key asset and leadership going forward.
Life insurance policies can provide operating capital during this trying time and can assist in getting the company through a period of difficulty. Additionally, it can provide the opportunity for the surviving owners to buy the late partner’s shares from his or her heirs.
Arrangements such as this are often set up in a buy-sell agreement, a very important document in any business partnership. In a company that has multiple owners, you can combine life insurance policies in this document, and it would stipulate that on the death of a partner, the remaining partners can buy out the surviving family’s share at a previously agreed price. The life insurance would then pay the buyout.
Types of life insurance
There are two main types of life insurance, term and permanent.
With term insurance, the payment of the death benefit is guaranteed by the insurance company as long as the policy remains in force.
Permanent insurance, also sometimes referred to as whole life insurance, is designed to build internal cash value that can be accessed before the insured dies via policy loans.
Policyholders can tap into the cash value that builds up inside a permanent insurance policy to meet a wide range of financial needs.
Every individual and family’s insurance situation is unique, so you should consult with an insurance professional for guidance on the best type of life insurance for your personal and your business needs.
Personal life insurance can help your family pay off any business debt and cover living expenses after your passing. Your family would then have time to decide what arrangements can be made with the business.
Key person life insurance is a type that protects against the loss of a critically important employee. In the event of death, the insurance would pay the owner or owners of the business.
Small business owners may need several types of insurance policies. David Lerner Associates offers a variety of financial products and services designed to protect your family and business.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Certain investments and insurance policies are offered by prospectus. Investors should read the prospectuses carefully and consider the investment objectives, risks, charges, expenses and other information before investing. Prospectuses for products offered by David Lerner Associates, Inc. may be obtained by calling 1-800-367-3000.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com