Farmers® understands your business has unique coverage needs
As a business owner, you’ve invested time, energy and resources into building your company. But what happens to your business and loved ones if something unexpected occurs? At Farmers, we understand the unique challenges that business owners face, and we’re here to aid you while you help financially protect what matters.
How can business owners use life insurance?
Running a successful business requires foresight and preparation — not just for growth but to handle unexpected obstacles. Life insurance can be an important tool as you plan for the future of your business, key employees and loved ones. Below are some strategies that business owners can use to help financially protect their assets, ensure business continuity and strive for long-term stability.
Strategy:
How it can help business owners:
Executive bonus plans
Helps to allow business owners to reward and retain key employees by providing a life insurance policy as a bonus. The business can deduct the premiums, and the employee benefits from the policy’s cash value and death benefit, creating a generally tax-efficient retention tool.
Key person insurance
Life insurance can help protect the business from financial loss if a key employee or owner dies or becomes disabled. The death benefit can help the business cover lost revenue, recruit a replacement and reassure stakeholders and support business continuity.
Protecting business and personal assets from debt
Life insurance can help cover a business owner’s debts upon their death, which may allow the business to avoid selling assets or face financial strain. It also can help protect the owner’s family by keeping personal assets, like homes or savings, from being used to settle business liabilities, helping maintain financial stability for loved ones.
Funded buy-sell agreement
A funded buy-sell agreement can help provide that upon the death or departure of a business owner, the remaining owners or heirs have the funds to buy out the deceased or departing business owner’s share. This helps smooth ownership transitions, financially protects the business and aids the family’s financial interest.
Strategy:
Executive bonus plans
How it can help business owners:
Helps to allow business owners to reward and retain key employees by providing a life insurance policy as a bonus. The business can deduct the premiums, and the employee benefits from the policy’s cash value and death benefit, creating a generally tax-efficient retention tool.
Strategy:
Key person insurance
How it can help business owners:
Life insurance can help protect the business from financial loss if a key employee or owner dies or becomes disabled. The death benefit can help the business cover lost revenue, recruit a replacement and reassure stakeholders and support business continuity.
Strategy:
Protecting business and personal assets from debt
How it can help business owners:
Life insurance can help cover a business owner’s debts upon their death, which may allow the business to avoid selling assets or face financial strain. It also can help protect the owner’s family by keeping personal assets, like homes or savings, from being used to settle business liabilities, helping maintain financial stability for loved ones.
Strategy:
Funded buy-sell agreement
How it can help business owners:
A funded buy-sell agreement can help provide that upon the death or departure of a business owner, the remaining owners or heirs have the funds to buy out the deceased or departing business owner’s share. This helps smooth ownership transitions, financially protects the business and aids the family’s financial interest.
To see if life insurance from Farmers New World Life Insurance Company is available in your area, contact your local Farmers agent today.
Example of risks and how a business owner may manage them:
Risk:
You have a strong performer in a sales position who would be an attractive candidate for a competitor.
Coverage:
You have a strong performer in a sales position who would be an attractive candidate for a competitor.
Risk:
The manager who oversees your company’s day-to-day operations is unable to work as a result of a covered event.
Coverage:
Key person insurance can help if a business partner or top employee dies or becomes disabled — the policy’s benefit or cash1 value can be used for candidate searches, training expenses and lost income.
Risk:
You know your family would be burdened by business debt if you passed away before completing ambitious expansion plans that rely on large loans.
Coverage:
Life insurance proceeds can help cover outstanding business debt and help protect your family’s personal assets.
Risk:
Owners of a business want to receive fair compensation for their stake in the event of death or departure.
Coverage:
A funded buy-sell agreement can help owners or their estates receive a fair buyout while allowing the business and remaining owners to continue the business.
Farmers works to build strong customer relationships
Farmers has spent over 95 years putting customers first. Are you shopping for coverage, or do you have a question about your policy? Maybe you’re ready to get a business life quote. Be sure to let a Farmers agent deliver personalized service and support.
You’ll experience a similar level of care from our knowledgeable claims representatives, who will provide assistance as quickly as possible.
To learn more about what Farmers can do for your business, call an agent today.
Benefits to recruit and reward employees.
Talk to a Farmers agent about life insurance options for your business.
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¹Cash values may be accessible through policy loans or partial surrenders. Policy loans that are not repaid and partial surrenders will reduce cash surrender value and death benefit. Policy loans are subject to interest charges. If your policy is a modified endowment contract, loans and surrenders may incur taxes and penalties.
Life insurance issued by Farmers New World Life Insurance Company, 3120 139th Ave. SE, Ste. 300, Bellevue, WA 98005. Products and features may not be available in all states and may vary by state. Restrictions, exclusions, limits, and conditions apply.
Any product guarantees are subject to the financial strength and claims-paying ability of Farmers New World Life Insurance Company, which is solely responsible for the obligations under its own policies. Farmers New World Life Insurance Company is not licensed and does not solicit or sell in the state of New York.
Farmers® companies, employees, agents, and representatives do not provide legal or tax advice. In general, partial or full surrenders from a permanent life insurance policy in excess of the policy’s basis are taxable. Limited circumstances exist where death proceeds will be taxable. This material has been prepared for general informational purposes only, and is not intended to provide and should not be relied on for tax, legal or financial advice. Because each individual’s situation is different, specific advice should be tailored to your particular circumstances; you should always consult your own tax, legal and other advisors before engaging in any transaction. This material reflects our general understanding of current law as of the date hereof, but tax laws and IRS administrative positions may change. This material is not intended to and cannot be used to avoid any Internal Revenue Service penalties. We specifically disclaim any liability resulting from the use or application of information contained in this publication. Farmers New World Life Insurance Company is not affiliated with or endorsed by any government agency.
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