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Learn How Life Insurance Can Help Clients Protect and Grow Their Businesses

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Business owner clients face many challenges. Life insurance can help.

In today’s competitive environment, business owners face the challenges of:

  • Ensuring the continuation of their businesses, even after they’ve moved on.
  • Attracting and retaining quality people for the continued success of their businesses.

You’re in the unique position to help them make the important decisions today that can help ensure the future and financial security of their businesses.

 

Business Continuation

Many small, family-held businesses fail to survive beyond the first generation because the owners neglect to prepare for the disposition of their business at their death, disability, or retirement. A priority for many is to ensure the future of the business if the primary drivers of success die prematurely.

 

Life insurance can be used as a business tool to:

  • Help ensure the continuation of a business—beyond the current owner or owners.
  • Help ensure the business is sold at its fair market value.
  • Provide funds to a business owner’s spouse and heirs.
  • As part of executive compensation arrangements, to attract new talent and retain key employees.
  • Fund Buy-Sell Arrangements that create a ready market for an owner's interest.
  • Provide Key Employee protection. When a key employee dies unexpectedly, the financial loss to a business can be devastating. When a life insurance policy insures a key employee’s life, the death benefit can be paid to the business and used to help meet debt obligations, offset lost sales, or cover the expenses associated with recruiting, hiring, and training a replacement.

 

Executive Compensation

Having the right executive compensation in place can help a business owner attract and retain key people. You can offer various plans, including those tied to life insurance. Many options offer benefits to both the business and key employees. There is a wide array of plan designs and funding arrangements that Prudential can help you to explore, learn about, and confidently present to business owner clients.

 

Start the life insurance conversation with business owners

Life insurance is frequently used to fund business continuation and executive compensation strategies. It’s a versatile financial instrument that covers the risk of premature death by providing an immediate death benefit and also offers an opportunity for income-tax-deferred cash value growth and tax-favored withdrawals and loans.1

In addition, the death benefit life insurance provides is generally received free of income tax under IRC §101(a).2

IMPORTANT TO NOTE:
Before policy issue, the business must provide the key person specific written notice of its intent to acquire coverage and receive his or her consent. It's suggested that the business retain this notice and consent to substantiate the annual tax filing on Form 8925. A sample notice and consent form may be available from your financial professional.

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Advisors - Life Insurance

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Life Insurance Sales Desk

    Call Us: 844-458-9006

   Email Us: lifesalesdesk@prudential.com

If you’re already appointed with Prudential, visit PruXpress to learn more about how life insurance can help clients meet their protection needs.

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Footnote

1 Outstanding loans and withdrawals will reduce policy cash values and the death benefit and may have tax consequences. Basis may be withdrawn first, up to the point of gain, income tax‐free. Thereafter, loans may be taken. Distributions from MECs (such as loans, withdrawals, and collateral assignments) are taxed less favorably than distributions from policies that are not MECs to the extent there is gain in the policy. For distributions from a MEC prior to age 59½, a federal income tax penalty may apply to the extent there is gain in the policy. However, death benefits are still generally received income tax-free pursuant to IRC §101(a). The death benefit will be reduced by any withdrawals or loans (plus unpaid interest). Clients should consult a tax advisor.
2 For employer-owned contracts issued after August 17, 2006, death proceeds will be subject to income tax except where specific employee notice and consent requirements are met, and certain exceptions apply.

Neither Prudential nor its representatives provide legal or tax advice; clients should seek the advice of a tax or legal professional.

Life insurance is issued by The Prudential Insurance Company of America, Pruco Life Insurance Company (except in NY and/or NJ), and Pruco Life Insurance Company of New Jersey (in NY and/or NJ). All are Prudential Financial companies located in Newark, NJ.

Created Exclusively for Financial Professionals. Not for Use with Consumers.

For Compliance Use Only: 1016696-00001-00 Ed. 02/2019