According to the Small Business Administration, there are about 28 million small businesses in the U.S. Of this amount, about 5.2 million have fewer than 20 employees. This segment is one of the fastest growing labor segments in the economy.
If you are a business owner with fewer than 20 employees, you might think your size prevents you from establishing a competitive benefits package for yourself and employees, safeguarding yourself (you and your family) from disaster, or growing your wealth. That can’t be further from the truth.
We at My Family Life Insurance have worked with many small business owners. When we tell them what they can establish – to protect themselves and their family as well as for their employees – for the amount of coverage and the cost, most give us a double-take. No, we aren’t joking around here (we don’t joke about protection and livelihood).
Intelligent Ways of Using Insurance
Although some ideas are mentioned on our Who We Help Page for business owners, here are some ways we have used the traditional lines of individual insurance – life insurance, disability, long-term care – through a business to enhance the business owner’s situation. Maybe you were not aware that…
- You really don’t need to go through medial underwriting or underwriting at all. Many carriers will underwrite you, without medical requirements, for life and disability income insurance (that’s right, even as stringent as the underwriting disability income insurance is)
- Some carriers will allow up to $7,500 or more per month of long-term disability insurance benefits. Coupled with the limited underwriting process, that can make the coverage very attractive
- You can establish benefits for part-time employees. We work with one carrier in particular that has a unique plan for part-time employees, all paid by the part-time employees (so you, as the owner, just need to offer it). There is a limited underwriting process, but we have found most part-time employees sign up for the attractive benefits.
- If you are a husband/wife or family business, we can get you insurance. Many carriers disallow coverage for husband/wife or family businesses (say, a chiropractor or accounting office). We work with several that do allow this.
- If you are a business of two employees, we can get you coverage (life, disability, etc), with limited or no underwriting.
- We know that long-term care costs are on the rise. A largely unknown strategy is that you, as a business owner, can deduct the premiums of a LTC policy much more favorably than as individual person. You can even offer this benefit to whomever you want and even include the costs of your spouse, regardless if he or she works in your business.
- Disabilities do happen. Through a Business Overhead Expense policy, you can deduct the premiums of this important coverage on your tax returns. If you are disabled, you will have money to pay your overhead expenses (employee salaries, rent, etc) and keep your business going. If structured properly, the benefits are essentially tax free.
- A Buy/Sell agreement provides a legal mechanism to transfer the wealth of your business to your family. Think about everything you are putting and have put into your business. If you died or seriously injured yourself tomorrow, would your family be able to receive this value so they can continue their standard of living?
- The most important employees to the success of your business can be covered in ways that can protect you, as a business owner. This coverage can be added as enhancements to a benefits package. These include, but are not limited to (with a summary of each):
- key person insurance – covering a key employee with life insurance and/or disability insurance. If this person dies or becomes disabled, you (the business) are recoup costs of the value this person
- split dollar plan – a sharing of life insurance benefits in which the business can recoup its share of premiums
- executive bonus plan – business purchases life insurance or other benefits for key employees. Beneficiary is the employee’s family.
- non-qualified deferred compensation plan – life insurance can be used to properly establish certain deferred compensation plans
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