There’s nothing quite like that feeling when life reaches a plateau where your job or your business are fun and making money. You’ve got it made or at least got it by the tail and now you can just work hard and put it on cruise control, right? I will be leaning more toward the business side of this question, but the answer is yup, sort of.
Over the last decade we’ve seen unprecedented job loss in downsizing and unprecedented loss of benefits such as life insurance and health insurance. So that job plateau that we’ve reached with a deep breath and fist pump, may really be just a big flat area before a cliff (Thelma and Louise). I’m not saying to put on the worry hat as soon as you believe you finally have it made, but it is time for a review and reality check and maybe putting a few precautionary measures in place. Just like having a budget, knowing what you have available in the case of job loss is critical to know and like that budget critical to follow. What happens to your benefits? Do you have health issues that are allowed in your group life insurance coverage, but could present problems or at least challenges if you needed to acquire personal life insurance? Do you have any personal life insurance in force to supplement your cheap group coverage?
When you own a business, well when most of us that own businesses think ahead, there is always the question of what happens to that business and any employees if you die. It’s called business succession planning and most answers, whether a solely owned business or partnerships, require life insurance to make sure the business survives for the sake of your family, employees and customers. The nature of successful businesses is that they are the result of reputation and trust built over time, trust that can be lost if it is built on the back of the founder of the company. It would be nice to think your business could just be handed over to the next in charge and it would keep going and not lose traction and in some cases that’s possible, but even then an infusion of cash through life insurance into the business can ease the burden in three areas. 1. Customers may slow down until they see if the company is going to in fact be able to serve their needs. 2. Something needs to be worked out to either work a surviving family member into the ownership position or 3. Buy out the family if none of them are inclined or able to be involved.
It may be a bit simpler in the case of a partnership, and all partnerships in the absence of boat loads of cash should have a buy/sell plan in place funded by life insurance. Simply put, the partners agree on a value for the business (needs occasional updating) and they then carry life insurance on each other. If one dies the surviving partner receives the life insurance proceeds and per the legal buy/sell agreement, they buy out the widow or surviving family of the deceased. I’ve seen this work very well with the plan in place and I think it’s safe to say that we all know the catastrophic results of liquidating a business that didn’t have life insurance in place to get past this kind of event.
Bottom line. There is no magic in business that guarantees succession. It takes planning, a legal frame work and life insurance. If you have questions or would like to know what life insurance would cost, or if it’s still affordable if one of the insured’s has health issues call or email me directly. We also have answers for those who need business life insurance in a hurry (4 business days). My name is Ed Hinerman. Let’s talk.