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Need Life Insurance for your business???

When should life insurance be utilized for businesses and business owners?

They write whole books about this, but let me list just a few areas where it may be appropriate.

Many businesses are sole proprietors or family owned. When the business negotiates a loan with the bank, the bank usually wants a personal guarantee of the owner to repay the loan. A life insurance policy on the owner in the amount of the loan can make sure that at the death of the owner, the loan can and will be repaid to the bank without undue financial strain on the business.

If your business has more than one owner, it would be good business practice to have a buy-sell or stock redemption plan in place. If one owner dies, the agreement specifies how the deceased owner’s share of the business will be purchased.

While this buyout could be spread out over a period of years, the cost to the business could be difficult to sustain if it adversely affects the companies cash flow. Life insurance, purchased at a minimal expense, may be a much more cost effective solution to funding the cash required for the payout. It also provides peace of mind the other owners and the deceased’s heirs knowing that they are assured of receiving the payout as specified in the agreement.

There are many more uses of life insurance for business, and we will discuss these in future blogs.

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From a mother to her son...

A Love Letter About Life Insurance

www.lifehappens.org

I recently ran across a yellowing sheet of paper with a typewritten letter; it was a copy of a note I had sent to my son. The date on the letter was Nov. 21, 1989, and my son, who is now in college, was just four months old at the time. As I read it again after 20 years, I realized something: Although I was telling him about the life insurance policy we had just purchased for him, it was, in fact, a love letter.

Love letter, you say? What has life insurance got to do with love? Well, quite a lot, it turns out. The bottom line is that you buy life insurance because you love people and want to protect them financially.

I may be biased because I work in the industry, but take a look at the letter to my son, and see if you don’t agree:

Dear J.P.:

Today is November 21, 1989, and possibly you are wondering what the date has to do with writing you this letter.

While you are only four months old at the present time, I hope that this is a date you will remember, because today we purchased for you a life insurance policy. It is one like we have and it will be for your use for the rest of your life.

J.P., the difference between financial success and failure is often determined by whether or not a person can discipline themselves in a consistent and conservative financial strategy. Life insurance is ideal in this respect because it has withstood the test of time both for family security and savings; it’s the greatest savings plan in the world because IT WORKS!

It may be that you will have to call upon the cash value of this policy many times during your lifetime and, at such time, we hope you will remember that we started this for your benefit.

This policy carries with it two features of particular significance. The first is an automatic purchase option, which will allow us to increase your coverage as you attain certain ages. The other feature is one that has been very meaningful to me in my financial life and it is called disability waiver of premium. This means that in the event you should ever become disabled, your financial plan will be self-completing for you and your family.

This policy is a special gift of love and affection from both your mother and me; and we suspect that it will be remembered long after all other gifts are forgotten.

May God’s blessings be with you always.

Love always,

Dad and Mom