Whole Life Insurance: An Overlooked Foundation of Business Succession Planning?
Many business owners realize that they will be forced to deal with issues such as business succession at some point, which is why they want to have a plan that’s guaranteed to be there when they need it. The versatility, guarantees, and permanence of whole life insurance can help solve some of these inevitable challenges.
Whole life insurance can, for example:
• Protect a business or business owner from financial loss – including the loss of control of a part of the business – as a result of the death of a partner or co-owner. As part of a buysell agreement, the policy’s death benefit can be used to help purchase the deceased partner’s shares from his or her estate.
• Protect a business from loss as a result of the death of a key employee. The policy’s death benefit can provide a cushion that enables the company to continue operating while seeking a replacement.
• Be used as a highly valued employee benefit for key personnel whose loved ones can benefit from permanent, guaranteed coverage in the event of the employee’s death. In addition, the employee may be able to draw upon the policy’s cash value through loans to help supplement income in retirement.*
Furthermore, as long as the policy is kept in force, the cash value of a whole life insurance policy can give businesses the flexibility to manage through the ups and downs of the business life cycle by providing funds to respond to expected and unexpected challenges and opportunities. A whole life insurance policy’s cash value can be used as:
• A source of cash when credit is tight for circumstantial or external reasons.
• A source of emergency funds to pay for replacement or temporary talent if a key employee leaves, becomes disabled or retires.
• A “bookable” asset on the company’s balance sheet.
And it’s not an all-or-nothing decision. Many smaller or younger businesses may opt for quality, convertible term life insurance, so that as they grow and additional cash becomes available, they’re able to bridge to the broader benefits of whole life insurance.
For more information on how whole life insurance can help business owners, visit www.massmutual.com/customervoices/business.
© 2011 Massachusetts Mutual Life Insurance Company 01111-0001