term life insurance

Business Succession and Term Life Insurance

Business Succession and Term Life Insurance

A business owner’s greatest asset is most often his or her business. Ensuring a comfortable retirement means getting the most value out of the business that he or she can. Life insurance can play a key role to help make sure that the owner receives the full value of the business in the event of a business-purchase situation. One common situation is to use life insurance to secure the financing and payment of a closely held business buy-out.

SAMPLE BUSINESS-PURCHASE SITUATION

John, age 45, has agreed to buy the business owned by his boss, Bill, who is retiring. John will purchase the business for $4 million over a 10-year period. While John is a good credit for the loan, Bill wants to make sure that if something were to happen to John, the terms of the deal would be met.

SOLUTION USING TERM LIFE INSURANCE

John secures life insurance in case he dies during the payment period. NEEDS: Enough life insurance to satisfy the purchase agreement, yet affordable.  A  Term Life Insurance policy maturing in 10 years with a $4 million face amount is an affordable way to resolve the situation. Bill can be named the beneficiary of the policy to the extent of the outstanding balance on the purchase price of the business, or the policy can be assigned to as collateral. An added benefit to the policy is that John can name his wife as beneficiary of any remaining death benefit.

Current Term Life Insurance Rates

The chart below shows current Term Life Insurance rates for different ages:

What To Do Next?

If you are a business owner in a situation similar to the one described above, we can help you find the insurance policy that best meets your personal and financial situation. Contact us as indicated below:

  • Call our Toll Free Number: (888) 950-8376
  • Call our Office Number: (786) 353-2528
  • Click HERE