Small businesses mistakenly believe that offering life insurance to employees is too costly for their business, and that the cost outweighs the benefits. But life insurance policies can protect small businesses. It’s not about how small or big the business, but the value of the business’ workforce.
Increase Employee Retention Rates
Business Owners offer employees life insurance as financial motivation for employees to stay instead of seeking other job opportunities. Elite management packages often include life insurance as a lucrative bonus. Employees and their families are attracted and motivated to stay with the company with this generous incentive. As an employer, you can purchase several life insurance policies as a group policy for relatively low premiums.
Company Tax Reductions
For your key employees, you can increase the value by including the payment of their life insurance premiums. This plan is extremely beneficial for the employees since they own the policy, including the cash value and can assign a beneficiary. All the premiums you pay are all tax- deductible which also reduces your annual tax bill.
Reduce Risk to Company
Businesses are at risk when there is a sudden death of a valuable employee. A tragic event like this can have negative effects on your business. The company would suffer from revenue loss and see an increased expense in replacing and training a new recruit.
Investment Protection for Partners
What would happen to a business if one of the partners passes away? There is a particular type of life insurance called Buy and Sell Agreement that protects both your business and your partner’s family. When a buy and sell contract is funded by life insurance, the policy owner buys out the share of the deceased partner. Setting up this financial agreement ensures the business continues functioning, while also benefiting the deceased partner’s family..