Three ways term insurance can help protect your business

Three ways term insurance can help protect your business

With an affordable pricing structure and the ability to convert to a high quality permanent policy, Ohio National’s Term Plus policies can work for many business owners. 

See three ways term insurance may help your business.

Prepare for business continuation

Term life insurance can be an ideal funding vehicle for a buy-sell agreement that is triggered on the death of a business owner.

Buy-sell planning is an agreement providing for the sale of a business when a business owner dies or retires.

A fully funded buy-sell agreement can help:

  • Predetermine the price at which the buyer agrees to purchase, and the owner agrees to sell, their interests in the business
  • Create a market for each owner's share of the business
  • Provide money to fund the purchase at the exact time it is needed
  • Establish the business' value for federal estate-tax purposes

Each owner can purchase an affordable tem policy with a face amount large enough to cover the agreed-upon purchase price.

If the owner dies, the death-benefit proceeds from the affected policy pass income-tax free to the surviving owner. The surviving owner can then use the proceeds to help purchase the business interest of the deceased partner per the buy-sell agreement.

Learn more about Buy-Sell Agreements.

Protect against the loss of a key employee

Successful businesses are built on a variety of assets: equipment, inventory, real estate, accounts receivable, cash, goodwill, and most importantly, key people. The death of a key person could have a devastating effect on the future of your business.

A key person would be anyone who contributes significantly to its success and whose death would result in a tangible loss. Key person insurance helps to indemnify your business for the death of a key person and the loss of that individual’s skill and expertise.

To put key person protection in place, you could buy a term policy with a benefit based on the employee's value to the organization (most often, a multiple of salary). The business is both policy owner and beneficiary. Should the key person die, the death benefit proceeds are used to offset losses such as sales, productivity, and credit.

Learn more about Key Person Insurance

Reward your key people with a powerful fringe benefit plan

To attract and keep innovative, quality people, you need to offer quality fringe benefits. Fringe benefits don’t have to be difficult or complicated. In fact, a simple plan can often be the best.

With an executive bonus plan, the key employee owns life insurance on his or her life and your business pays the premium directly or indirectly through a salary bonus. The bonus amount is typically deductible by your business as an ordinary and necessary expense. The same bonus amount is taxable to the employee as ordinary income just like any other cash bonus. In addition, you always have the option to increase bonus payments to offset your employee’s income tax liability.

You can start the plan using an Ohio National Term Plus policy. In later years, the employee has the option to convert the policy to permanent insurance.

Learn more about Executive Bonus Plans

We can help

We can help you use term insurance to protect your business. Contact your financial professional about business planning today.

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Life insurance products are issued by The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Products, product features, and rider availability vary by state. Registered products distributed by Ohio National Equities, Inc., Member FINRA.

FlexTerm Series XII policies ICC18-TR-1/1U, Plus ICC18-TR1.P/1U.P) and any state variations are underwritten and issued by, and guarantees based on, the claims-paying ability of Ohio National Life Assurance Corporation.

Premiums are based on the age of the insured at nearest birthday and specified underwriting classification and is subject to change without notice. Premiums for issued policies may be different than a quote premium based upon actual underwriting classification. The premium stated in the policy is guaranteed to remain level for the term of the policy. Term products convertible to the end of the level term period or to the policy anniversary date nearest the insured's 70th birthday, whichever occurs first. Conversion options vary by term product. The policy includes certain limitations during the first two policy years.

Product, product features and rider availability vary by state.  Issuer not licensed to conduct business in New York.

This provides general information that should not be construed as specific legal or tax advice nor the law of any particular state.  Please seek the advice of a qualified legal or tax professional for your specific situation.