Many small business owners are so busy working at improving and growing their business, they don’t always think about their exit strategy. What will happen if the business is passed onto a family member or someone who does not have the capital up front to buy them out?
Many small businesses are family owned. Often times there is not enough money in the business’s reserves to pay them when they exit. At this point, they will be taking monthly payments and that is only if the business doesn’t take a dip once they leave.
So what is a solution? Whole life insurance is a great tool to help businesses owners have a lump of cash set aside in case this scenario happens. At 4% interest rates and 5% dividends it not only protects the business in a death of the owner but supplies cash in the cash value account for a potential buy out when there are not enough funds from the buyer for the whole downpayment.
Keyman life insurance supplies coverage for the business in case the owner/partner/key person passes away and it can provide a cash account to be used for this purpose.
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