INSURANCE . RETIREMENT . INVESTMENTS
Retirement Planning and Business Succession Planning
The most basic use of ‘Business Succession Planning is to protect your company in the event of the untimely death of a major contributor to the “bottom line”. However, an often-overlooked use of ‘BSP’ is to provide supplemental retirement benefits to YOU, the business owner(s).
In this case, ‘BSP’ serves a dual purpose. In addition to protecting the company, a cash value life insurance policy can ensure that money is available at a future date to supplement retirement. If key man life insurance is properly structured, it may provide an attractive addition to your retirement package.
How It Works
When a company purchases BSP, the business typically owns the policy, pays the premiums, and is the beneficiary. When incorporating retirement planning, there are several ways of constructing the plan. The company can bonus the money to the key person or business owner and have them own the policy and name their own beneficiary. This option is known as the executive bonus arrangement and there are advantages to this type of structure. Additionally, there are other options such as a non-qualified deferred compensation arrangement. This strategy is a bit more complicated but essentially has the company purchasing and owning a policy on the ‘key person’ and includes a vesting schedule where the cash values are “vested” to the key person over time.
How to put my business in the 2%
Simple! Call and set appointment with your Business Succession Planning Specialist TODAY.
“BSP is the ‘key’ to keep your doors of your business open, when the doors of your life closes”
‘BSP’ provides the financial mean to stabilize a company during the adjustment period after the loss of a ‘key employee or executive’. When a death or disability occurs, the business may lose critical management skills and may experience periods of falling sales and productivity. Additionally, significant cost will be incurred identifying and training the person or persons that can take the place of the key employee. If your business would be dramatically impacted by the loss of one or more of your top people, key man insurance can effectively protect against this risk and you should consider purchasing key man insurance policies to protect your company.
Finally. Succession planning allows you to create a legacy. You will live on in the hearts of your present and future generation and your name will be written on the lips of your family, business partners and staff, because YOU decided to secure their future. Succession planning is the key to keep the doors of your business open, when the doors of your life close.
Thank you for joining us for Part 2. This brings us to the end of our Business Succession Planning in Barbados segment.