4. Connect protection, retirement, and succession
Lesson 4 of 5 · A Capital Strategy for Successful Business Owners
4. Connect protection, retirement, and succession
Personal retirement income, key-person protection, buy-sell funding, and business succession serve different purposes. One policy does not automatically solve all four. Ownership and beneficiary choices should follow the purpose and the legal agreements.
Review retirement assets outside the company and the tax treatment of those assets. Consider whether retirement depends on a future sale price, a specific buyer, or continued distributions. Timing and value of a business sale are uncertain.
A policy may be part of the discussion, but compare other reserve and retirement options as well. Guarantees are subject to the insurer’s claims-paying ability. Policy borrowing reduces available benefits and can produce lapse or tax exposure if poorly managed.
Your exercise: Identify what would happen to your family and company if you could not work for six months. Then identify who could buy the business, what agreement exists, and how the purchase would be funded.