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One of the first things any business owner needs to consider is how to protect against events that may threaten the future of the business, like the death or disability of a proprietor, partner or key employee. A Business Continuation plan incorporates elements of health, life and disability insurance. Each piece plays a vital role in ensuring the businesses success and continuity.
Health Insurance
A majority of employees cite health insurance as the most important benefit an employer can provide. It provides financial protection against the high cost of catastrophic claims due to illness or injury. It helps you, your employees and your family get the needed medical attention to begin the process of recovery. It can do so without leaving an imposing financial burden.
Another benefit to you and the business is the ability to use health insurance as a hiring and retention tool. Employees are less likely to leave a position that offers health benefits for a similar competitors position if the competitor has an inferior plan, or offers no medical benefits.
Life Insurance
Life insurance is a versatile tool that can address many concerns to a small business owner or partner. It can be used to protect ownership interests by providing the funding for a buy sell agreement. It provide financial stability to your family through the guaranteed sale of the deceased owners interests dictated by the buy sell agreement. And, it can provide the needed dollars to offset a tax burden on heirs inheriting an interest in the business after the death of an owner.
Life insurance can also be used to weather the storm created by the death of a key employee, providing the capital to hire and train a replacement and to replace lost income due to the key employees death,
From an individual perspective it complements the business planning you have done ensuring that you family will be provided for after you’re gone.
Disability Insurance
Disability insurance is even more versatile than life insurance. It can be used to fund a buy sell agreement to buy out a disabled partner, protecting ownership interests. Like life insurance providing financial stability to your family through a guaranteed sale of ownership interests at a amount based on the business value.
It also can be used to keep your business operating while you are disabled, paying ongoing expenses such as salaries, utilities and mortgage or rent costs.
Finally, it protects your personal income guaranteeing the ability to continue receiving an income stream even if you are never able to return to the work force. It can create a perpetual income until age 65.
Putting the pieces in place requires working with a variety of advisors including your CPA, a business attorney and a professional insurance broker. These advisors help you address key tax considerations, create business agreements and ensure proper funding to satisfy such agreements.
You put a tremendous amount of time, money and energy into creating your business. Your customers and your employees count on you to ensure that the business is prepared to meet any of Real Life’s contingencies.
Protection comes first. Without it, any growth or profitability is at risk. You have to have a plan. Real Life happens every day. Have you protected every day?
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