Ilan Cuellar, CFP®, PPC™, CPFA

(281) 815-4108 ext. 1011

Insurance Strategies to Help You Protect Your Business

| March 14, 2013
As a business owner, you need to ensure that you have adequate insurance coverage to protect family, business partner(s) and key employees, so that no matter what the future holds, the business can continue to provide for those who depend on it.

With the right insurance strategies in place, you can guard your business against financial loss due to illness, disability or death. Here are some tips for putting in place a proper plan that will help protect your business, yourself and your families’ needs.

Obtain adequate life and disability insurance to cover all assets
Did you take out loans secured with personal assets to start or grow your business? If your family inherits the company and the loans have not been paid off, they might have to sell or liquidate the business (perhaps at a discount) to satisfy the debts. Protect them with an individual life insurance policy that provides funds to cover debts, ongoing living expenses and future plans.

Have a plan in case a business partner becomes the only partner
A buy-sell agreement ensures that you or your co-owner will buy out the other’s share of the business when circumstances take one partner away from the company.

Develop an exit strategy
Be prepared to leave your business, no matter what the reason, with a strategy that focuses on four key areas: estate planning, retirement planning, succession planning and business valuation.

Insure the right-hand man (or woman)
Purchase key person life and/or disability insurance for employees who greatly contribute to the bottom line of your business; the policy’s benefits can help make up for lost sales or earnings and help cover the cost of finding and training a replacement.

Take care of the employees, and they’ll take care of you
Workers consider employee benefits (health, life, dental, vision insurance, retirement plans) a decisive factor when evaluating a new job opportunity. However, employee benefits can be costly, so if you are a small employer you will want to share the costs with your employees.

Reward the top executives
Section 162 plans (Executive Bonus Plans) are a simple way to reward top employees and offer certain tax advantages. Your employee purchases a cash rich insurance policy and names himself/herself as owner; you receive a tax deduction for paying the premiums, which are considered compensation to the employee.