Succession Planning for the Business Owner, Insurance

Succession Planning for the Business Owner and Insurance, Patrick D Coen, Partner, Zanck, Coen, Wright and Saladin PC.

Patrick D. Coen PC: So life insurance can take various forms. There is whole life insurance and that has a residual value. There is term insurance which is insurance that basically only lasts for a certain term and there are various hybrids which mix both types of insurance.

Likewise the use of that insurance depends upon whether it’s the company that’s going to be buying the insurance or whether it’s going to be individuals, the key man or the management team that is going to hold the insurance.

Therein lies another issue which is whether those insurance premiums are going to be deductible as business expenses by the business or whether you are going to have the individuals own those policies.

Therefore you are going to have to increase compensation in order for them to then buy the insurance. But the company is not going to take the insurance in and of itself, it’s going to be owned by key individuals.