If you’re a business owner, insurance can provide not only protection, but also opportunity when it comes to growing your business. Life insurance policies can protect shareholders and their family members, the corporation itself and key persons to the business. And, it can also enhance the cash flow to the business by assigning the policy as collateral.
Consider insurance when you prepare your Shareholders’ Agreement. Insurance provides immediate funding to purchase the shares of a shareholder in the event of his or her death or disability. Insurance is more cost effective and convenient to fund a buy/sell agreement than other options, such as securing borrowed funds, liquidating assets, creating cash reserves or using after-tax business profits. At the same time, the shareholder can integrate the tax preferred nature of life insurance to achieve their planning goals.
Other uses for corporately owned insurance:
Key person insurance
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