Funding a Buy-Sell Agreement with Life Insurance

Life Insurance to Fund Buy Sell AgreementsLife rarely goes according to plan. An unexpected death, disability, divorce, or another event can derail a business and create a huge financial impact on its success. Your business is likely your biggest investment and the future resource for funding your retirement.

All businesses should prepare for a multitude of issues that could put the future of the business in danger. For instance, who would manage/own the business upon retirement or unexpected death/disability of an owner?  Is there an internal candidate who is experienced enough to manage the business, or would the business need to be sold to an outside competitor? What about your family’s needs regarding the business?

A buy-sell agreement is an excellent solution to this risk. It is simply a “will” for how you want the business to transition on Your Terms based on certain triggers such as retirement, death or disability.

There are options for funding a buy-sell agreement, but some options open the door to other problems.

  • A company savings account would pay cash when an owner dies, but if death unexpectedly occurs, there may not be enough funds in the account to carry the business.
  • A loan could be obtained at the time. Unfortunately, interest could be high and it may create unnecessary risks for the surviving owners and business.

The best option to fund a buy-sell agreement is a life or disability insurance policy. These types of policies allow for instant cash/liquidity to be used in either continuing the business or preventing a fire sale, allowing proper time for a buyer to be found. Other advantages include: death benefits proceeds are generally income tax free, funds are purchased for pennies on the dollar, and premiums are likely to be significantly lower than loan interest.

Life insurance also offers the option of a Cross-Purchase Plan or an Entity Plan. In a Cross Purchase Plan, each owner purchases a life insurance policy on all other owners and is named beneficiary. In an Entity Plan the business purchases a life insurance policy on each owner and is named beneficiary of plan allowing the business to buy shares stock redemption style, preventing other owners from paying out of pocket.

Both a Cross Purchase Plan and an Entity Plan offers flexibility such as:

  • Price fixing, formula, or appraisal (most important! Establish fair market value of stock or business at time of agreement.)
  • Pay in cash or installment.
  • Different terms for different events (different prices for retirement, death, disability, etc).

Having a buy-sell agreement is imperative. Preparing one in advance eases negotiations and agreements as no one is sure what the next day will bring.

If you would like more information on how a life insurance product could fit into your business plans, contact Abbey Bowersox today at 727.522.7777 or by email at abowersox@w3ins.com.

 

What is Key Person Life Insurance?

Key Person Life Insurance (also known as Key Man Insurance) is a life insurance policy purchased by a company on a key employee such as the owner, partner(s), majority shareholders or another person(s) whom the continued successful operation of the business depends on.  The policy protects the company in the event of their unexpected death.  Separate key person life policies are purchased for each key employee.  The company pays the premium and is the beneficiary of the policy.

key person life insurance

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Why Child Life Insurance is a Great Investment

As a parent, life insurance for your child is probably the furthest thing from your mind. You have other decisions to think about like college funds and savings or a life insurance policy for yourself. The thought of talking about life insurance is probably like the sound of nails on a chalkboard, at least it was for a friend who is near and dear to me.  Thankfully, we discussed the need, and she decided to purchase child’s life insurance for her son who was just an infant at the time. Child Life insurance

When Child Life Insurance Hits Home

At the time, he was a healthy child and it was inexpensive and easy to obtain the coverage. Then, at the age of 7 years old, he was diagnosed with a devastating illness. Trying to get coverage post diagnosis would have been a challenge. He may not have qualified, and the cost may have been higher due to a now pre-existing condition. Unfortunately, this wasn’t the first time I’ve seen this happen.  It has happened to several families close to me. I want to share this with as many parents and grandparents so that they can avoid this very unfortunate news. 

Securing child life insurance early on allows you to lock in your child’s insurability and to purchase coverage at inexpensive premiums.  The time to take action and secure their eligibility is now. 

Child Life Insurance Options

Did you know Auto-Owners Insurance Company has incredible products to meet your child’s life insurance needs?  When you obtain child life insurance through Auto-Owners Insurance Company’s Simplified Issue Whole Life policy, your child will have a policy amount that increases 50% automatically at both ages 18 and age 25 without a premium increase. The coverage, premiums, and the cash value is guaranteed to age 110. The greatest benefit: premiums never go up!  This product can be issued when the child is between 15 days old and 17 years old.  Auto-Owners has a great Whole Life policy for children that are over age 17.  They also offer different payment options including, a single paid in full payment or paying the premium for ten years. Once the premium is paid in full, your child/grandchild has a paid-up policy for life. Just think, now your child will not have to pay high monthly premiums on their life insurance, you took care of it for them! 

Help them with their financial planning and security.  Who wouldn’t want that for their child?  It is so important to invest in them and their future. What a wonderful, insightful gift you can give to your child or grandchild to protect their insurability. A gift that keeps giving!

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Fall Means FLU (shots)

It’s Time to Schedule Vaccine Clinics and Educate Employees

 Imagine Hit me with your best shot, the unofficial theme of every employer flu shot clinic, playing on a loop while every employee receives a flu vaccine. It’s heartening to see so many coworkers opting for the latest flu protection; every jabbed arm represents one less worker potentially sidelined by fever, nausea, headache and more.

Influenza (flu) is getting second billing on the vaccine front because of sickness star COVID-19, but that doesn’t mean it’s not dangerous. Here’s why the workplace should embrace the availability of the latest flu vaccine and how you can either schedule a successful flu shot clinic at your place of business or promote receiving the vaccine off-site.

Influenza is serious.

These days, it seems as if you can’t turn on the news without learning about the latest COVID-19 vaccine. The novel coronavirus and its Delta variant may hog the spotlight, but a nasty viral veteran awaits to emerge in the Fall with fury. Influenza (commonly called flu) is exceedingly worse than a typical cold. It can demand weeks of recovery. In some cases, it can cause death.

But don’t worry – there’s a shot for that. And though it’s not 100% effective, opting for the flu shot in 2021 could be an especially good idea. After all, the COVID-19 pandemic is not over. Hospitals still need to dedicate resources to treating those who suffer from severe cases. An onslaught of flu victims could result in an overwhelming influx of patients and not enough medical professionals or equipment to adequately help them.

But what’s the big deal? How much absenteeism does the flu really cause?

What this question really hides is dollar signs. Related to the queries Will the cost of an employer-led flu clinic be worth it and How much productivity can I lose to the flu, that number varies. However, flu is highly contagious and can spread through an office like wildfire. Imagine just a few employees sidelined perhaps for weeks, and the effect usually becomes apparent. A flu vaccine is likely much less expensive to offer to employees. Plus, a clinic is often included in your health plan. It’s a win-win for employers.

It’s impossible to do anything but estimate the cost of absenteeism related to the flu, but according to flu.gov, it’s estimated that 111 million days of work are lost each year due to the virus. That amounts to approximately $7 billion in productivity loss. These are staggering numbers, to be sure – and they can be lowered through vaccination.

But what if the vaccine isn’t formulated to address the latest strain of flu?

For those workplaces returning to some semblance of water cooler chatter after so many months of remote work, the comments about flu vaccines run the gamut from believer to passionate objector. I get the shot every year, and I’ve never gotten sick is a popular refrain. So too is I’ve never gotten that shot, and I’ve never had the flu either.

The truth is that no flu shot is going to be 100% effective. The vaccine is formulated based on the best data scientists gather about the three or four strain most likely to win “Most prevalent of the year,” and it’s never simple to guess. Even a strong hypothesis can miss the mark. Still, when the strain of prevalent flu matches the vaccine, the shot is extremely potent.

That means the coworker strutting around saying I’ll never get that flu shot might be living on borrowed time. This could be the year he catches the flu, misses weeks of work, and decides that opting for a flu shot would have been a supremely good idea.

Are there side effects from the vaccine?

Here’s side effect number one: You’re likely protected from contracting a nasty virus. Other side effects that can occur with the flu shot (according to the CDC) include low grade headache, fever, nausea, muscle aches, fatigue, and soreness at the point of injection. Severe reactions are extremely rare.

 Who can benefit from the flu shot?

Nearly everyone aged six months and older can benefit from the flu shot. Pregnant women are often recommended to receive it because it does double-duty; the vaccine actually offers their unborn baby limited immunity upon birth. Vaccinated children have a much lower chance than other children of dying from influenza. The elderly are at higher risk for serious flu complications; therefore, the flu shot is a sound idea for them as well.

Is there a special flu shot for people over the age of 65?

There is. It’s called the trivalent flu vaccine, and it’s extra-strong in terms of creating an immune response. However, older adults in this age category can also opt for the normal flu shot. Learn more about the high-dose one here.

Is there an option other than the shot?

For the needle-averse, there’s good news: There is a nasal flu vaccine that, according to WebMD, can work just as well as the syringe method. However, those under the age of 2, over the age of 50, and pregnant women are not advised to vaccinate in this manner. It may not be available as part of your on-site flu shot clinic, either. Be sure to ask before you tell employees that it will be.

What does the CDC say about the flu vaccine?

Get it. That’s the main message from the CDC, which looks at the risk versus reward of contracting the flu compared with receiving the shot. Rare exceptions occur, but on the whole, most of the population can benefit from the vaccine.

Tell me about this year’s vaccine.

The CDC continually updates its information about this year’s vaccine to make it the most accurate possible. Any licensed vaccine provider is fine, they say, including approved vaccines not made with any eggs (good news for people with allergies). Note that the CDC does declare that getting vaccinated too early is a no-no; therefore, don’t opt for the vaccine in July or August. September and October are prime time vaccination months, but even stragglers can see benefits all the way through January.

In 2020, only about half the U.S. population opted for the flu shot. Therefore, manufacturers did not manufacture enough vaccine for every single American. Demand is expected to soar in 2021 thanks to COVID, so opting for your flu shot in that September-October time span is a sound idea.

It is possible to be infected with COVID-19 and the flu at the same time.

You read that correctly. And though at this moment it is believed that COVID-19 may be ultimately deadlier than the flu, having both simultaneously is both dangerous and likely exceedingly uncomfortable.

You’ve convinced me. How do I set up an effective flu shot clinic?

Do you work with a wellness coordinator? If so, call that person and ask how much guidance they can offer. Some will schedule the entire event; others will give you resources to do so yourself. A few elements are crucial for a successful workplace vaccination program:

  • Select the vaccine administrator. Will an outside provider pay a visit to your office, set up in the break room and start vaccinating? A community immunizer is an option as well. Find one of those here.
  • How will employees pay for the flu shot? Communicate in a clear, concise manner if employees are responsible for some or all of the cost. Note: If you can fund the flu shot clinic in-house, that may encourage more employees to vaccinate.
  • Schedule the clinic for an opportune time – preferably before late October. Fall is prime time for flu season.
  • Still mostly remote? Discover where your employees can receive the shot off-site and offer an incentive for those who select it. Effective rewards include time off of work to obtain the shot, department contests, etc.
  • Gain buy-in from multiple departments and C-suite members.
  • Advertise, advertise, advertise. The CDC has some informative flyers here.
  • Make sure employees know whether their dependents are also eligible for free or reduced-cost flu shots.

Dangers from COVID-19 and the flu are real and often preventable. Making sure your employees are educated regarding the facts of both vaccines and the viruses will help them make informed decisions. You don’t have to do this alone, either: for questions regarding health and vaccine clinic events, contact W3 wellness coordinator Trish Blocker at 727-522-7777 or tblocker@w3ins.com.

Here’s to a flu season where more people than ever before choose vaccination. The double-dose of COVID and flu viruses make it more important than ever.

Have Computer, Need Therapy?

Mental Health Awareness Via Screen: Sharing the Teletherapy Lowdown with Employees

The doctor will see you now has taken on new meaning during this pandemic, as social distancing necessitated a pivot from classical in-person sessions to online screen appointments. The therapist’s couch is now the living room loveseat, or the kitchen chair, or the breakfast nook — any place, really, that promises solid Internet access.

Teletherapy, also known as online therapy or e-therapy, is a secure, often-effective way to utilize therapy services. The client makes an appointment with a therapist, logs on at a precise moment, and voila! Professional help is there. In a world that often offers instant gratification in the form of computerization, therapy this accessible can be extremely effective.

Here’s the downlow on the virtual therapy office: It’s a way for people to seek help anytime, anywhere. Need last-second appointments? Real-time advice dealing with stressors? Just a sympathetic listener? Teletherapy provides all of the above. For those who may have been reticent about reaching out for mental health services, the computer screen offers a welcome buffer. Instead of gearing up for a potentially emotional experience throughout the continuum of scheduling, transportation to the appointment, and sitting in a foreign room with a stranger, teletherapy brings treatment to the patient on his or her terms.

It’s this stark difference to in-person therapy – along with other, notable advantages – that indicates teletherapy is here to stay. It was here before the pandemic, of course, but the uptick in virtual services currently being offered shows no sign of slowdown. It’s time to get on the teletherapy wagon, so to speak. Read onward to learn more about the virtual therapy session and how to share this safe, efficient and cost-effective solution with your workforce.

  • Many medical carriers offer the option through telehealth providers – Check with your carrier. Have an Employee Assistance Program (EAP)? There’s a solid chance therapy appointments are part of that. Remember: Your employees aren’t going to utilize services they know nothing about. It’s up to you to publicize what is available to them. The EAP may even extend to dependents.
  • If teletherapy is not covered under either your standard employee medical plan, consider sharing other resources with employees. Meditation, for example, has been shown to reduce stress levels, and while it isn’t a direct substitute for therapy, it has proved beneficial for centuries. Apps like Headspace that offer guided meditation are inexpensive or free.
  • Virtual therapy is safe and private – In fact, whether a therapist meets with a client at the office or via Zoom or another online portal, they are bound by the same laws of confidentiality. For a person to glean the most benefit from therapy, it’s important that the client offer full disclosure to the therapist. He or she is not going to turn around and tell the employer about the discussion. This is not a ‘Big Brother’ situation; it’s simply a way to nurture behavioral and mental health.
  • Bringing others into the therapy room is a seamless endeavor with teletherapy. A marked advantage of video conferencing software is its ability to bring people together with just a few clicks. For families that require group therapy, sessions via a screen connect grandpa in Idaho, say, with the rest of the grandkids in Tampa, et cetera.

Just as with everything in life, teletherapy won’t work for everyone, but it’s definitely worth educating employees about what is included as part of their work benefits. This safe, private and cost-efficient option offers potential peace of mind and help – all just a click away.

For more information about telehealth, visit here or contact W3 Insurance Wellness Coordinator Trish Blocker at 727-522-7777.