Small Business Life Insurance

When a small business owner passes away, it can be the center of turmoil and instability. It raises many issues, including personal loss but also pragmatic questions involving the replacement of a key asset and leadership going forward.

But what if the owner doesn’t pass away but is still incapacitated and can’t work?

Nearly 70% of Americans 65 and older need long-term care at some point, according to the U.S. Department of Health and Human Services.

Life insurance and long-term care insurance are financial services that are extremely useful, especially to someone who has family depending on them or someone who is getting on in age and starting to consider what might happen to their family as the inevitable approaches.

Something that is gaining traction in the financial services world is “hybrid insurance.” It’s life insurance with a long-term care rider that allows you to use that money for healthcare if you need it.

“Whatever you don’t use gets passed along to your family after you pass away. You can pay for it either all at once or over the course of 10 years or so,” says David Lerner Associates Executive Vice President of Investor Services, Daniel Lerner.

Considering that long-term care insurance policies are some of the more complicated ones that you may encounter, this hybrid product may be just the ticket to simplify the process.

For small businesses, 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.

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. https://www.davidlerner.com/insurance.aspx

IMPORTANT DISCLOSURES

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.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC