Retirement of the Business Owner

Business owners can strategically leverage life insurance to achieve tax mitigation, asset protection, and wealth accumulation.

Tax Mitigation

Life insurance can be employed as a tax-efficient strategy. Business owners can use policies that offer tax-free death benefits, enabling them to transfer wealth to heirs or business successors without incurring estate taxes. Additionally, certain insurance policies, like Indexed Universal Life (IUL), provide cash value growth that accumulates tax-deferred, which can be accessed during the owner’s lifetime without triggering income tax. This can offer an attractive supplement to retirement income.

Asset Protection

Cash value life insurance policies offer the benefit of protection against creditor claims which makes life insurance a valuable tool for asset protection. Asset protection allotted to life insurance policies do vary by state, there are many favorable privileges for life insurance especially compared to alternative assets,

Wealth Accumulation

Life insurance can facilitate wealth accumulation by combining insurance with investment elements. Cash value policies allow business owners to build a tax-advantaged savings component, generating potential returns that can be competitive with traditional savings or investment vehicles over time. These accumulated funds can be accessed for various financial goals, such as financing business expansions or supplementing retirement income.

The Late Nate Sachs Discussing IULs for Business Owners

Learn how to escape the business owner’s retirement trap. If you’re like most business owners, you tend to put all of your money back into the business. In fact, 75% of all closely held business owners’ net worth is their business. Relying on your business to be your sole source of retirement income is like putting all of your eggs in one basket. If you plan to use your business to fund your retirement, consider that 95% of the time, it does not work. It is imperative to have a retirement plan in place that is not solely dependent on your business.