Corporate dollar efficiency to preserve an enterprise

⇒ Candidate profile

Business is less about the accumulation of assets, than it is the knowlege, skill and ingenuity of the people who contribute to that growth. In a small operation, that could be the founder alone, then as time goes on, many individuals may become ‘key’ to its continuing prosperity. In fact, many successful business owners have been known to express the genuine belief that if they lost all their assets but retained their key people, it would just be a matter of time until they could rebuild to even greater heights.

⇒ Financial challenge

On the other hand, the loss of one of those key contributors could be far more devastating. To be clear, we’re not talking about a brief temporary absence, but rather the death of someone who is critical to profitability, and even survival. It’s challenging to replace unique talent at any time, and especially so under an emotional cloud and pressing time constraints. And in a closely-held company, it’s not only the loss of a loved family member and their income-earning capacity, but the real risk of losing the business itself.

⇒ Highlighted features

Insurance pays a TAX-FREE amount that can be devoted to any purpose that the company feels is needed in order to maintain the business:
♦ Injecting cash to fill in for a productivity pause
♦ Overtime and temp HR to bridge capacity gap
♦ Time-away and support for grieving employees
♦ Bolstering liquidity to ease lender concerns
♦ Out-of-office/pocket reserve, to meet with and calm any nervous suppliers or customers
♦ A contingency fund to respond to opportunistic competitors, or for a proactive PR campaign
♦ Buying time for a proper talent review/search

⇒ Planning strategy

With intimate knowledge of the business, the founder and senior management take the lead in determining who are the key people. Together with their accounting, legal and insurance advisors, they then determine the nature of exposure for the loss of each of them, and estimate the financial impact in each case. The corporation is owner and beneficiary of the insurance, allowing it to efficiently allocate the proceeds to the highest priorities without delay.

* iTIPS = Illustrated Tax & Insurance Planning Scenarios
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