Protecting Your Business Investment With Insurance
The DFS Group, LLC offers numerous insurance plans that will help you protect your business from the loss of a key employee or business owner. The loss of a key person or business owner can put a huge dent in the business model of the company at present and in the future. Unfortunately, businesses can lose a key person in death or by leaving their job. As a result, businesses are faced with the reality of having to replace lost revenue when that key employee died or left.
There are several types of insurance that corporations use to protect themselves financially in case of this type of loss:
Business Continuation Agreement (also called a Buy-Sell Agreement):A life insurance policy bought to cover the loss of a business owner according to the percentage of the business they owned. Premiums are not tax deductible and benefits are not taxed.
Corporation Owned Life Insurance Agreement (COLI):A life insurance policy owned by the corporation that covers the loss of a business owner or key person in the company.
Cross-Purchase Partnership Plan:(a type of Buy-Sell Agreement) Each business owner purchases a life insurance policy on other owners and is used to buy out their stock from their family when another business owner dies.
Stock Purchase Plan:Similar to a Stock Redemption Plan, this plan is purchased by individual stockholders with a pre-determined value of each stockholder's ownership percentage in the company. If the stockholder dies, this allows the beneficiary to buy the stock from the cash proceeds of that owner' policy's death benefit.
Stock Redemption Plan:(a type of Buy-Sell Agreement) The business purchases a life insurance policy on all controlling stockholders of the company to prevent loss of funds if the stockholder should die.
Split Dollar Agreement:A life insurance policy owned by the company and the employee, normally used for key employees, to cover the death of that employee. In the event the employee dies, a pre-determined amount (percentage or return of premium) will be reimbursed to the company for offering the employee a life insurance plan. If the employee departs the company, the premiums paid can be deducted from the cash value of the policy and the employee can either pay the premiums on their own to keep the policy or cancel the policy.
Key Person Life Insurance:A life insurance policy that covers the death of a Key Employee to cover major expenses such as the time lost in finding a suitable replacement and the time taken for training the new employee.
Insuring Your Full-Time Employees As A Company Benefit
Term Life Insurance is often offered by employers, to their employees, as an incentive to stay with the company and also creating a tax write off for the employer. Term Life Insurance is usually very affordable with the lowest amount of underwriting for a policy to be issued. Based on the length of time the employee is set to work for the company, a term can be set for that particular employee while working for the company. Once separation of employment occurs between the employee and employer, the employer can stop paying premiums for the Term policy which will cause the policy to lapse.