Whole Life Insurance for Business Owners

Business owners have a lot on their plate. Apart from the daily challenges, they also have to be prepared for other challenges that could come their way and take care to reduce risks as much as possible.

Using whole life insurance, business owners can not only secure their family’s future, but they can also extend that protection to their business. Below, we’ll discuss how whole life insurance can be useful for business owners and how to determine whether it’s the right way to go.


Why Whole Life Insurance?

As a business owner, you may be wondering why whole life insurance? There are many reasons why you should consider some type of life insurance policy, especially if you have a family who relies on the business for survival. While life insurance can help protect your family and your assets, whole life insurance takes it one step above.

With whole life insurance, it’s not just coverage but a long-term investment that continues to increase over time. Instead of having coverage that kicks in when the unexpected happens, whole life insurance can be there and growing for any kind of emergency.

It can give business owners control over their assets and allow them to draw on it in case they need it or want a low-tax option to fall back on when looking to expand.


Key Whole Life Insurance Benefits

At the core of whole life insurance is a combination of lifelong coverage. This coverage features tax-advantaged savings and helps protect your family as well as assets for the long term. Included as an asset is a business, which takes a lot to keep running and to grow. When you choose whole life insurance, you’ll get a long list of benefits, including:


Lifetime Coverage

Unlike some policies out there, lifetime coverage will ensure that you have coverage for life. There are no terms and there is no end date to your coverage, two things that you won’t find with every insurance policy.


Cash Value Guarantee

When whole life insurance policies are structured with a cash value option, there are a lot of benefits that come along with it. For example, one key benefit is that policyholders can access the funds in their policy at any time. This could be an option for business owners just in case the unexpected happens.



The premiums that are paid into whole life insurance policies are subject to earnings. Because of its market value, there are potential to collect dividends when there is a notable profit within the company value. This could be beneficial and add some extra funds to your pocket or go right back into the company.


Estate Planning

Life insurance should not only be there to cover expenses but to secure assets when you no longer can. Whole life insurance helps with estate planning, something that helps to protect assets and pass them on to future generations so that the legacy continues.


Pros and Cons of Whole Life Insurance

Just like any other policy out there, it’s recommended to weigh the options. Whole life insurance is filled with great things for both business owners and their families, as well as things that should be considered before taking out any policy.


The Pros

The benefits are abundant and part of the reason why more employers are making the switch to whole life insurance. These days, it’s not just about life insurance but a long-term investment with options that help when life happens.

  • The cash accrual – Tax-deferred growth is something that business owners can take advantage of. As the policyholder continues with coverage, the value available for the cash option increases, which holders can tap into when they need to.
  • Tax-free loans – While it’s great to have access to cash, sometimes withdrawal can result in large tax percentages. With whole life insurance, holders can take out loans from their policy without all the hefty taxes.
  • Fixed premiums – Premiums are guaranteed to stay flat and will not increase over time. Some insurance policies increase, and holders have no way to bargain, having to pay the higher premium when it goes up.
  • Lifelong coverage – There is no permanent coverage here, it extends throughout the policy holders’ life and not one day less.
  • No yearly exams – Besides the initial exam, there are no additional exams needed. Some policies require that holders get an examination yearly or if there are any changes to the health including disease or sudden illness.
  • Option to surrender – Financial situations are not always guaranteed, something that all policyholders should keep in mind. If there are any financial changes, the holder has the option to surrender, get the cash value back, and use that toward getting things back on track.


The Cons

Whole life insurance is not without drawbacks, some of which might send you searching in the other direction when it comes to choosing a life insurance policy.

  • It’s Complex – The complexity of a policy like whole life insurance runs deep. There are many features, some of which are not beneficial. It takes a knowledgeable agent to navigate and find the right fit.
  • High Premiums – Because of all the benefits, expect to pay higher premiums. Paying more is not always a bad thing, though it could be far out of some business owner’s reach.
  • Fees – Because whole life insurance is a vehicle for growth, there are fees that can take away from the total useable amount. Be sure to look at the terms and conditions to determine the fees and the structure to make sure you get the max benefit.


Worthwhile Complexity

Finding the right insurance policy as a business owner can be challenging. To find the right fit and understand the features and options that work best for you, give Sim a call.

Not only will she point out key pros and cons but give you a good idea of what a policy will look like for you and how it will benefit your business and those you love at the same time.


Essential Planning for Financial Security

Helping business owners and self-employed professionals grow retained earnings tax-free, pass more wealth to the next generation, and protect their biggest asset – themselves, the executive of the business by acquiring a key person life insurance policy.


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