5 Reasons Why Business Owners Should Have Whole Life Insurance

Aug 10, 2022

Health Insurance

5 Reasons Why Business Owners Should Have Whole Life Insurance

Many small and medium-sized business owners are unaware of the importance of a business life insurance policy to their firm's profitability. Since it has monetary value, whole life insurance benefits business owners in a way that other types of insurance do not. This monetary value accrues over time due to interest and dividend payments.

The truth is that all business owners require whole life insurance, regardless of size. It can help businesses bypass typical banks and loans, benefit their employees and win tax breaks.

Here are a few reasons why business owners' insurance is suitable for your firm:

  1. Whole Life Insurance Policy Makes a Great Investment

    As the contractual owner of a life insurance policy, the business owner has first rights to the accumulated cash value. The business money is returned to the life insurance company for future business expenses.

    Instead of paying a financial institution hefty interest rates, the business owner can finance their expenses in a way that allows them to recoup an interest cost.

  2. An Effective Method of Attracting and Retaining Top Talent

    Employers can choose to purchase life insurance for their employees. This allows business owners to receive a tax break for paying the insurance and use the policy's cash value. The business owner can choose between naming the employee's estate as the policy's beneficiary or their company as the beneficiary.

    Allowing the employee to choose the recipient is a fantastic benefit that firms may offer.

  3. Whole Life Insurance Offers a Business Eviction Plan in Which One Owner Buys Out Another

    A "buy-sell agreement," a type of whole life insurance scheme, is an excellent business exit strategy. Each business owner is given whole life coverage under this plan.

    When one business owner dies, the surviving business owner will utilize the death benefit earnings to purchase the deceased business' portion of the business.

  4. Safeguards Against the Loss of Key Personnel

    A "key person" policy, similar to a buy-sell agreement, allows firms to safeguard against income loss due to the loss of key people. Business owners can fund these policies and use policy loans to finance current and future business expenses and liabilities.

    The policy's death benefit offers business owners funds to offset the cost of filling vacancies left by important staff departures.

  5. Whole Life Insurance Offers Special Tax Benefits

    There are various tax advantages to purchasing whole life insurance. Distributions can also be taken tax-free with good planning. Estate-planning procedures ensure that the proceeds of a death benefit are not included in the estate tax computation.

    When an employer pays life insurance premiums into a policy on behalf of an employee, the premiums may be tax-deductible.

Explore Insurance with Us

Life insurance for business owners is a valuable asset that may be used since it offers flexibility, growth, and security. Whether your company is massive or small, having business life insurance should be one of your top responsibilities.

This blog discusses the reasons why a business owner needs life insurance. Looking to get insurance for your firm? Contact us at Abatelli Insurance today to explore various insurance options.