Business Owners who own a small practice or are independent contractors need to take charge of their own retirement plans, also offer this benefit to key employees. This added value creates added value to your employer/employee relationship. There are many options available for insurance solutions, all of which can help you, as a business owner, decrease your current tax liability and help your savings gather momentum because earnings grow with deferred tax liabilities. Understanding the types of plans available is a first step in determining which are best suited for achieving retirement goals, each plan that is structured for our clients are unique depending on the goals that are established.

When retirement goals and contributions to achieve these goals are done at an early age, the amount of contribution to the established plan will be less, the more a person waits to put a plan into effect, the higher yearly contributions will have to be.

Health insurance for business owners can be a crucial aspect of managing your financial and personal well-being. As a business owner, you have several options for obtaining health insurance solutions. Here are some key points to consider:

Individual Health Insurance: If you are a sole proprietor, you can purchase an individual health insurance plan. This is often the simplest and most flexible option. You can buy a plan on the healthcare marketplace (in the United States, this is often referred to as the Health Insurance Marketplace) or through a private insurer.

Small Business Health Insurance: If you have employees, you may want to consider offering group health insurance solutions plans to attract and retain talent. This can include options like Small

Business Health Options Program (SHOP) plans, which are available through the Health Insurance Marketplace with us.

Health Reimbursement Arrangement (HRA): Some business owners choose to set up an HRA for themselves and their employees. An HRA is an employer-funded account that employees can use to pay for qualified medical expenses. HRAs can be used in conjunction with individual health

insurance policies.

Health Savings Account (HSA): If you have a high-deductible health plan (HDHP), you and your employees may be eligible to open HSAs. HSAs offer tax advantages and can be used to save for medical expenses.

COBRA: If you’re leaving a job with group health coverage to start your own business, you may be eligible for COBRA, which allows you to continue your previous employer’s health insurance for a limited time.

Self-Funded Health Plans: Some larger businesses choose to self-fund their health insurance plans, meaning they pay for employees’ healthcare costs directly. This approach can offer more control and potentially cost savings but comes with greater financial risk.

When selecting health insurance as a business owner, consider the following factors:

Coverage Needs: Assess your personal and employees’ healthcare needs, including doctor preferences, prescription medications, and any chronic conditions.

Budget: Determine how much you can afford to spend on health insurance premiums and other costs. This might vary depending on the size and profitability of your business.

Tax Implications: Be aware of tax incentives and benefits associated with offering health insurance as a business. In some cases, you may be eligible for tax credits.

Compliance: Ensure that your health insurance offerings comply with relevant laws and regulations, including the Affordable Care Act (ACA) in the United States.

Consult a Professional: Health insurance can be complex, and laws and regulations can change. It’s a good idea to consult with Us to navigate your options.

Ultimately, the best health insurance solutions for business owners depends on your unique circumstances, the size of your business, and your financial situation. Make sure to conduct thorough research and consider your options carefully to make the best choice for your needs.

Life insurance can do some pretty amazing things for people. It can buy loved ones time to grieve. It can pay off debts and loans, providing the surviving family members with the chance to move on with a clean slate. It can keep families in their homes and pre-fund a child’s college education. It can keep a family business in the family. It can provide a stream of income for a family to live on for a period of time. First things first, though: you need to own life insurance.

Too many Americans do not have adequate life insurance protection. According to the industry research group LIMRA, 95 million adult Americans have no life insurance whatsoever. Here’s the bottom line: A majority of families either have no life insurance or not enough, leaving them one accident or terminal illness away from a financial catastrophe for their loved ones.

What if you were suddenly gone and your family had to manage on their own? When was the last time you did the math to make sure your loved ones would be financially sound? When was the last time you had your life insurance needs reviewed by an insurance professional? Have you done your homework to find out what kind of life insurance benefit you have available? We provide a better alternative to term life insurance policies

Contact us today!

The following are concepts we help our clients apply to handle business risks

and benefit from those advantages that only business owners have:

Buy/Sell Agreement

A Buy/Sell Agreement is a contractual agreement that provides for the continuation of a business in the event of the death or disability of a sole proprietor, partner or shareholder. An agreement may stipulate that, upon the death of a shareholder or partner of a company, the company or other partners buy back the deceased’s interest in the business. Life insurance solutions is commonly used to fund buy/sell agreements because it provides both liquidity and tax advantages in funding the transaction.

The following are important reasons to use a funded buy/sell agreement:

Liquidity – A funded buy/sell agreement creates a market instantly for the deceased’s share of the business. Otherwise, if a funded buy/sell agreement were not in place, the purchase of the deceased’s stake in the business would have to come out of the company’s working capital (if there was enough to fund the purchase). In addition, if an outside party were to purchase the deceased’s share, the timing of the transaction could result in a lower valuation of the company because of the death of a key owner and the fact that the deceased’s family wants to sell in a potentially soft market.

Transition of Business – A funded buy/sell agreement assists in the efficient preservation and transition of the control and management of the business.

Estate Planning – A funded buy/sell agreement can provide cash for potential estate taxes and

settlement costs and establish a valuation of the deceased’s business interest for estate tax purposes

Cost – a funded buy/sell agreement funded with life insurance can be inexpensive (the cost for the

purchase of a business is essentially the premiums paid for the life insurance policy).

Life insurance provides a simple way to administer a funding vehicle for the purchase of the deceased’s ownership according to the terms of the buy/sell agreement. The business also protects itself from any future drain on working capital, damage to its credit position and/or the legal or financial problems that could arise out of the company’s inability to fund the buy/sell agreement with its own income.

Buy/sell agreements may be set up in conjunction with Sole Proprietorships, Partnerships and Corporations. The method for each is a little different. Below you will find a general description of the options available for each type of business.

How a Buy/Sell Agreement funded by Life Insurance works

Sole Proprietorship

If a sole proprietor has a key employee that has the desire to purchase the business in the event of the sole proprietor’s death, a buy/sell agreement can facilitate the key employee’s purchase of the deceased’s business. The sole proprietor and the key employee would enter into a buy/sell agreement, and the key employee would purchase a life insurance policy on the life of the sole proprietor. Pursuant to the buy/sell agreement, upon the

death of the sole proprietor, the key employee uses the death benefit to purchase the sole proprietors business from his estate.

Partnership

Cross-Purchase Method

The Cross Purchase Method of entering into a buy/sell agreement works best if there are a small group of partners (preferably two). The partners enter into a buy/sell agreement and each partner buys a life insurance policy on each of the other partners lives. Pursuant to the agreement, upon the death of one of the partners, the surviving partners use the death benefit from the above- mentioned policies to buy the deceased partner’s business interest from his or her estate. The surviving partners then own all of the partnership while the deceased partners estate receives the funds from the sale of the deceased partners share of the partnership.

Entity Method

The Entity Method of entering into a buy/sell agreement offers the advantage of simplicity over the Cross-Purchase Method if there are more than two partners or if there is a likelihood of more partners joining the business later. In this scenario, the partnership and each partner enter into a buy/sell agreement. The partnership buys a life insurance policy on each of the partners lives. Pursuant to the buy/sell agreement, upon the death of one of the partners, the partnership uses the death benefit from the above-mentioned policy to purchase the deceased partners business interest from his or her estate. The surviving partners then own all of the partnership while the deceased partners estate receives the funds from the sale of the deceased partners share of the partnership.

Corporation

Cross-Purchase Method

The Cross-Purchase Method of entering into a buy/sell agreement works best if there are a small group of shareholders (preferably two). The shareholders enter into a buy/sell agreement and each shareholder buys a life insurance policy on each of the other shareholders lives. Pursuant to the buy/sell agreement, upon the death of one of the shareholders, the surviving shareholders use the death benefit from the above-mentioned policies to buy the deceased shareholders business interest from his or her estate. The surviving shareholders will own all of the outstanding corporate stock while the deceased shareholders estate receives the funds from the sale of the deceased shareholders stocks.

Stock-Redemption Method

The Stock Redemption Method of entering into a buy/sell agreement offers the advantage of simplicity over the Cross-Purchase Method if the corporation has more than two shareholders or if there is likelihood that additional shareholders will join the business later. In this scenario, the corporation and each shareholder enter into a buy/sell agreement, and the corporation buys a life insurance policy on each of the shareholders lives. Pursuant to the buy/sell agreement, upon the death of one of the shareholders, the corporation uses the death benefit from the above- mentioned policy to purchase the deceased shareholders business interest from his or her estate. The surviving shareholders then own all the outstanding corporate stock while the deceased shareholders estate receives the funds from the sale of the deceased shareholders stock.

Key Person Life Insurance

Maybe your business is operated primarily by one person or maybe your company is run by a small team of executives whose expertise is the lifeline of your business. The premature death of a key person could signal the premature death of the business. With a Key Person Life Insurance Policy and insurance solutions to increase the chances of survival if it were to lose a key member of the organization. Funds from such a policy could:

cover business debt

leave working capital for a surviving partner(s) to continue the business

identify and hire a replacement for the key person

provide cash for the business in case there is a major revenue shortfall because of the loss of the key

person

Key Person Life Mechanics

The first factor to consider in setting up a Key Person Life Insurance Policy is to determine how much death benefit is needed. The minimum usually considered is one times the key persons annual income, but other factors need to be considered. What if the business relationships of this person drive half of the company’s revenues? How difficult and costly will finding a replacement be? Are there business debts that would place financial hardship on the company? Once the death benefit amount has been determined, the business would purchase the policy on the key person. The key person would be the insured and the business would be the owner, payer and beneficiary of the policy. Permanent or term life insurance can be used as a key person policy depending on the needs of the business and how much they are willing to spend.

Executive Benefits

Many variations exist to offer key employees an executive benefit in the form of a life insurance policy owned by the company. Such policies are typically a permanent form of insurance and offer the employer “golden handcuffs” to attract and retain key employees. Not all business owners know on their own about the advantages that these concepts represent, but the truth of the matter is that all of these concepts provide very high benefits for those involved, we always guide our clients to make sure they achieve their financial goals and determine the correct concept to apply to each individual business plan.

Critical illness insurance is medical insurance that pays a lump-sum benefit upon diagnosis of a critical illness or condition. A critical illness insurance payout helps you avoid the financial strain a major illness can create so you can focus on your recovery. We provide a Policy that pays up to $250,000 in a lump sum, this Policy can be kept for life and returns 100% of the premiums paid (minus any claims) to a beneficiary upon insured’s death. This Policy covers the following Illnesses:

Heart Attack

Stroke

Cancer

Major Organ Transplant

Renal (Kidney) Failure

Alzheimer’s Disease

Paralysis

Blindness

Deafness

Business owners have worked too hard and have sacrificed too much to throw it all away with an inadequate estate plan. Business owners accumulate significant assets over the course of their career and have high liability, and special protections and strategies are needed to pass on and preserve those assets while minimizing the estate tax bite.

Business Owners Need Asset Protection

What is Estate Planning?

Estate planning involves preserving your estate for the transfer to your heirs and the proper distribution of your estate’s assets. Proper planning is important to avoid dying intestate which means passing away without a will or trust that provides instructions as to how your estate is to be transferred and to whom.

A will is a legal document created by the owner of an estate that sets forth his or her plan for the disposition of assets after death. In most cases, wills need to be in writing and witnessed by another party. In addition, the testator (the person creating the will) must be competent and free of duress at the time he or she makes the will. The Unlimited Marital Deduction. Provision that allows your

surviving spouse to inherit all of your estate free of estate and gift taxes at your death (your spouse must be a U.S. citizen to qualify for the marital deduction). However, once your surviving spouse dies, his or her estate may be subject to estate taxes depending upon the value of the assets in the estate. Proper planning, including use of trusts, can help alleviate these estate taxes.

What is a Trust?

A trust is an agreement made between two parties for the benefit of a third party. The Trustee holds legal title to property for the benefit of others.

A life insurance trust is a trust formed to own a life insurance policy. An accountant or attorney can help set up a trust. Trusts can be revocable or irrevocable.

What is an Irrevocable Trust?

An irrevocable trust is a trust in which the grantor cannot change the terms of the trust or terminate it. In addition, the grantor does not have access to the funds in the trust. Often such a trust is funded with life insurance and called an Irrevocable Life Insurance Trust (ILIT).

What is an Irrevocable Life Insurance Trust (ILIT)?

Life insurance is a unique asset in that it assumes its greatest value at the time of greatest need: at the demise of the insured.

The problem with large amounts of life insurance, however, is that the full face amount of the policy can be taxed in the estate of the insured if they own the policy. To avoid this occurring, it is important to establish an alternative entity as the owner of the insurance.

The most common method is for the insured to create an Irrevocable Life Insurance Trust (ILIT) which will apply for, own and pay the premiums on the insurance. If properly administered, this approach will have the result of bypassing estate inclusion at the death of the insured. This is normally considered the most efficient method of producing large amounts of liquidity at the moment it is most needed: when taxes or debts are due.

Typically, the grantor of the trust will make gifts to the trust each year to pay the premium. In order to keep the insurance out of the estate, it is imperative that the gifts qualify under the Annual Gift Exclusion. This is accomplished through the use of annual letters to the beneficiaries of the trust by the Trustee, offering them a window during which they can withdraw the gift. If that window expires or the beneficiaries decline this right in writing, the Trustee can use the gift to pay premiums or for other purposes allowed by the Trust document. These letters are usually referred to as “Crummey Letters,” after the court case wherein they were first utilized. They must be done each year a premium gift is made.

The Charitable Deduction

You can donate an unlimited amount of assets to a qualified charity free of estate and gift taxes. This is one way to make sure you are not paying estate taxes (or lowering your estate tax exposure). The amount contributed to charity is fully deductible before the estate tax rate is applied. Some estate holders prefer to have control over who gets the benefit of their estate. They may prefer to select a charity or cause they care for rather than giving the funds to the federal government. There may be

other tax deductions available to charitable donations. You may be able to reduce your income tax and capital gains tax on appreciated assets.

Estate Planning and Life Insurance

You work a lifetime to accumulate an estate; however, at your death the assets you pass onto your heirs may be subject to federal estate taxes and state inheritance taxes. If your estate is subject to estate taxes, taxes are due usually within 9 months of your death. Life insurance can play an important role in estate planning by providing the liquidity necessary to pay estate taxes and other expenses and avoid a “fire sale” of highly illiquid assets. Some expenses that must be paid upon an individual’s death may include:

federal estate taxes state inheritance taxes probate fees

legal and administrative fees debts

funeral expenses

Options to pay estate taxes and expenses include:

Use cash (assuming sufficient cash available).

Borrow the money (assuming loan can be secured on favorable terms).

Pay the IRS in installments under IRC Section 6166 (only available for closely held family businesses or farms and there will be an IRS lien placed on the business).

Pre-pay now by purchasing a life insurance policy with the possibility of paying pennies on the dollar. The funded irrevocable life insurance trust (ILIT) can be one of the most

cost-effective ways to pay for estate taxes.

We help businesses Protect their most valuable asset, their ability to earn an income. We provide a contract that protects the income that is generated in their occupation.

Disability statistics

It happens more often than you’d imagine:

Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire.1

Over 37 million Americans are classified as disabled; about 12% of the total population. More than 50% of those disabled Americans are in their working years, from 18-64.2

8.8 million disabled wage earners, over 5% of U.S. workers, were receiving Social Security Disability (SSDI) benefits at the end of 2012.3

In December of 2012, there were over 2.5 million disabled workers in their 20s, 30s, and 40s receiving SSDI benefits. 3

Chances of becoming disabled:

The following statistics come from CDA’s PDQ disability risk calculator:4

A typical female, age 35, 5’4″, 125 pounds, non-smoker, who works mostly an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:

A 24% chance of becoming disabled for 3 months or longer during her working career; with a 38% chance that the disability would last 5 years or longer, and with the average disability for someone like her lasting 82 months. If this same person used tobacco and weighed 160 pounds, the risk would increase to a 41% chance of becoming disabled for 3 months or longer. A typical male, age 35, 5’10″, 170 pounds, non-smoker, who works an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:

A 21% chance of becoming disabled for 3 months or longer during his working career; with a 38% chance that the disability would last 5 years or longer, and with the average disability for someone like him lasting 82 months.

If this same person used tobacco and weighed 210 pounds, the risk would increase to a 45% chance of becoming disabled for 3 months or longer.

A sample of factors that increase the risk of disability: Excess body weight, tobacco use, high risk activities or behaviors, chronic conditions such as; diabetes, high blood pressure, back pain, anxiety or depression, frequent alcohol consumption or substance abuse.

A sample of factors that decrease the risk of disability: Maintaining a healthy body weight, no tobacco use, healthy diet and sleep habits, regular exercise, moderate to no alcohol consumption, avoidance of high risk behaviors including substance abuse, maintaining a healthy stress level, and effective treatment of chronic health conditions.

Disability prevents people from earning a living:

There were over 2.8 million new Social Security Disability Insurance (SSDI) applications in 2012, slightly lower than in the two previous years, but still 29% higher than in 2007, and 67% higher than 2002 levels.3

61% of surveyed wage earners personally know someone who has been disabled and unable to work for 3 months or longer.5

Wage earners who know someone who has been disabled predict their own odds to be higher than respondents who do not. 5

The average group long-term disability claim lasts 34.6 months.6 The average individual disability claim lasts 31.6 months.7

One in eight workers will be disabled for five years or more during their working careers.8

Working Americans underestimate their risk of disability:

64% of wage earners believe they have a 2% or less chance of being disabled for 3 months or more during their working career.5 The actual odds for a worker entering the workforce today are about 25%.1

Most working Americans estimate that their own chances of experiencing a long term disability are substantially lower than the average worker’s.5

Disability causes severe financial hardship:

90% of wage earners rated their “ability to earn an income” as “valuable” or “very valuable” in helping them achieve long-term financial security — wage earners perceive their ability to

earn an income as even more valuable than retirement savings, medical insurance, personal possessions, other forms of savings or their homes.5

Medical problems contributed to 62%9 of all personal bankruptcies filed in the U.S. in 2007-an estimate of over 500,000.10 This is a 50% increase over results from a similar 2001 study.

Medical problems contributed to half of all home foreclosure filings in 2006.11

Common causes of disability:

According to CDA’s 2013 Long-Term Disability Claims Review12, the following were the leading causes of new disability claims in 2012:

Musculoskeletal/connective tissue disorders (28.5%) *

Cancer (14.6%)

Injuries and poisoning (10.6%) Mental disorders (8.9%)

Cardiovascular/circulatory disorders (8.2%)

The most common causes of existing disability claims in 2012 were: Musculoskeletal/connective tissue disorders (30.7%) *

Disorders of the nervous system and sense organs (14.2%) Cardiovascular/circulatory disorders (12.1%)

Cancer (9.0%)

Mental disorders (7.7%)

Approximately 90% of disabilities are caused by illnesses rather than accidents.

* This category includes claims caused by neck and back pain; joint, muscle and tendon disorders; foot, ankle and hand disorders, etc.

Few American workers are financially prepared:

How long could you afford to be without a paycheck?

Do you save any of your annual income? 48% of U.S. families don’t.13 Retirement savings? One-third of us have none.1

68% of adult Americans have NO savings earmarked for emergencies.13

65% of working Americans say they could not cover normal living expenses even for a year if their employment income was lost; 38% could not pay their bills for more than 3 months.5

Nearly nine in ten workers (86%) surveyed believe that people should plan in their 20’s or 30’s in case an income limiting disability should occur;

Only half (50%) of all workers have actually planned for this possibility. Fewer than half (46%) have even discussed disability planning.15

Most American workers’ incomes are not protected:

About 100 million workers are without private disability income insurance.1

69% of workers in the private sector have no private long-term disability insurance.1

Think Social Security or Workers’

Compensation will cover it? Better do your homework:

65% of initial SSDI claim applications were denied in 2012.3

Can your family live on $1,130 a month? That’s the average monthly benefit paid by Social Security Disability Insurance (SSDI) at the end of 2012.

The average SSDI monthly benefit payment for males was $1,256 The average SSDI monthly benefit payment for females was $99316

At the end of 2012:

7.3% of SSDI recipients received less than $500 monthly. 46% received less than $1,000 per month.

93% received less than $2,000 per month.17

Less than 5% of disabling accidents and illnesses are work related. The other 95% are not, meaning Workers’ Compensation doesn’t cover them.12

U.S. Social Security Administration, Fact Sheet February 7, 2013

U.S. Census Bureau, American Community Survey, 2011

U.S. Social Security Administration, Disabled Worker Beneficiary Data, December 2012

Council for Disability Awareness, Personal Disability Quotient (PDQ) calculator

Council for Disability Awareness, Disability Divide Consumer Disability Awareness Study, 2010

Gen Re, U.S. Group Disability Rate & Risk Management Survey 2012, based on claims closed in 2011

Gen Re, U.S. Individual DI Risk Management Survey 2011, based on claims closed in 2010

Commissioner’s Disability Insurance Tables A and C, assuming equal weights by gender and occupation class

The American Journal of Medicine, June 4, 2009 Medical Bankruptcy in the United States, 2007: Results of a National Study; David U. Himmelstein, MD, Deborah Thorne, PhD, Elizabeth Warren, JD, Steffie Woolhandler, MD, MPH

U.S. Courts, Bankruptcy Statistics, 12-Month Period Ending December 2007

Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures, Christopher Tarver Robertson, Richard Egelhof, & Michael Hoke; August 8, 2008

Council for Disability Awareness, Long-Term Disability Claims Review, 2012

U.S. Federal Reserve Board, Survey of Consumer Finances, 2010

American Payroll Association, “Getting Paid in America” Survey, 2012

Council for Disability Awareness, Worker Disability Planning and Preparedness Study, 2009

U.S. Social Security Administration, Disabled Worker Beneficiary Data, December 2012

U.S. Social Security Administration, Disabled Worker Beneficiary Data, December 2012