An effective business succession plan and life insurance can ensure a seamless transition. But changes to goals, family dynamics, or other factors may necessitate adjustments to one or both plans or policies.
Financial professionals can lead a team that takes all aspects of your situation into consideration while taking your individual goals into account when creating a comprehensive strategy.
Life Insurance
No matter if you plan to remain actively involved with or sell off your business in the future, a well-thought out succession plan must be in place. This plan outlines how your company is to be handled in case of sudden death, disability or when exiting is desired.
In general, succession plans typically consist of listing potential successors in order of consideration and what qualifies them to take your place as leader of your business. Furthermore, you will need to document its value and set payment terms (cash, stock or both).
Succession planning should be carefully coordinated with any related estate plans to ensure they work cohesively. A knowledgeable business planner can assist in developing and documenting buy-sell agreements, tax minimization strategies through valuation discounts and life insurance policies – these tools allow for the transfer of ownership while giving peace of mind that your hard work and success will endure for years.
Disability Insurance
One of the greatest financial risks facing clients today is being rendered incapable of working due to illness or injury, so an insurance policy offering disability benefits is invaluable for helping to offset this risk. Most people can qualify for individual disability coverage without medical underwriting; each policy has its own definition of disability as well as waiting period before benefits take effect; generally speaking, longer waiting periods lead to lower premiums; most policies also include cost-of-living adjustments and some offer residual benefits that allow someone to continue working part time while receiving monthly checks as supplement to other income streams.
Individual disability insurance policies can provide crucial protection to small business owners, self-employed certified professionals and wage earners who don’t have group coverage. Buy-sell disability policies provide essential buy-out funds should one partner become permanently disabled; such insurance should form part of any succession plan for any company.
Long-Term Care Insurance
Long-term care services may become essential throughout our lifetimes, from help bathing and dressing to community programs that provide transportation or adult day care services; to care in a nursing home or assisted living residence. Long-term care insurance provides one way of paying for these expenses.
Long-term care policy options vary according to insurer and coverage amount. Some policies provide inflation protection that increases either daily benefits or maximum lifetime benefits annually by at least 5%.
Purchase of a long-term care policy is an important financial decision and should be discussed carefully with a licensed insurance agent. Insurance companies owe applicants and their agents the duty of honesty, good faith and fair dealing which means advertising must be truthful and consumers provided accurate comparisons between policies. Certain partnerships qualify for federal income tax deductions with their premium payments/reimbursements possibly being eligible for deductibility on state/federal returns.
Business Owners Insurance
A business owners policy (BOP) is an insurance bundle that combines general liability and property coverage into one package at a much more reasonable cost than purchasing these coverages separately. Small companies often prefer buying BOPs due to the greater savings potential over purchasing each coverage individually.
Office-based businesses meeting clients at their premises, small construction and trade companies and some service industries typically qualify for a Business Owners Policy (BOP). Depending on industry and location, larger companies might require more comprehensive coverage through a Commercial Package Policy (CPP), providing more flexibility with coverages but usually at higher premiums than a BOP policy.
An experienced insurance professional can assist in estimating how much it may cost your business to reopen following a disaster and can suggest appropriate coverage limits. You can use Coterie’s online quote tool to find a BOP tailored specifically to your unique requirements so you can focus on daily operations without worry of financial impact from unexpected occurrences.