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Which insurance and retirement plans do I need for my small business?
If your business needs have changed over the past year, you may want to consider updating your insurance and retirement plans. Learn more about insurance for small business owners and other options.
Types of business insurance.
Key executive life insurance
Your key people are your greatest assets. Life insurance for your small business can reimburse the company for loss of services if a key person dies. If you don’t have key person coverage on your most valuable people (and that includes you), you ought to at least explore its advantages. If you already have this valuable insurance, it may be time to review it.
Questions to ask:
- Are all key players covered, including the owner(s)?
- Are the amounts in proportion to the value of each key person?
- Should names be changed on policies where a key person has left the company?
- What’s the cash value on each policy?
Disability insurance1
If you, a partner, or a key employee become disabled, the loss to the company could be just as great as if one of you died. In fact, it could be worse, because the disabled person would still require an income.
Questions to ask:
- Do I have adequate disability insurance on myself?
- Do we have coverage on our key employees to help meet our responsibilities to them if they become disabled?
Small-business protection, property,2 and liability coverage2
A fire, vandal, or storm can wipe out your business in minutes. Another risk is being sued. That’s why it’s important to make sure your assets are protected.
Questions to ask:
- Do I have business continuation coverage? If so, is it adequate?
- If my facilities were destroyed, would my business be able to recover?
- Is my liability-related coverage up to date?
- Is my umbrella insurance coverage adequate?
Business succession planning—including a buy-sell plan and the insurance coverage to fund it
If you don’t have such a plan, perhaps this is the year to implement one. This type of employer insurance plan helps ensure that your family is appropriately compensated for the business if anything happens to you.
Questions to ask:
- If we have a plan already in place, is it current?
- Is adequate life insurance in place to fund the buyout?
- Does it include disability insurance needed to help replace my salary or income if I become ill or injured?
Deferred compensation
Deferred compensation allows you to pay a portion of an employee’s compensation at a future date. It’s an attractive incentive for select employees as well. By deferring a current raise, you can potentially get a tax break for yourself. Plus, you will be providing for your own future. As always, check with a tax professional about any potential tax implications.
Questions to ask:
- Am I fully aware of all the advantages and benefits of a deferred compensation plan?
- If there is a plan in force, am I taking maximum advantage of it?
Qualified retirement plans for small businesses
Many small businesses are looking for ways to provide a retirement plan for their employees and for themselves. There are several options, including Profit Sharing Plans, Simplified Employee Pensions, and SIMPLE Plans that can help you build a retirement plan for your business.
Questions to ask:
- Are you looking for tax deductions?
- Are you looking to contribute for just yourself or make matching contributions?
- Am I aware of all options that are available?
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1 Products available through one or more carriers not affiliated with New York Life Insurance Company; dependent on carrier authorization and product availability in your state or locality.
2 Property and liability is not offered through New York Life.
This material is for informational purposes only. Neither New York Life nor its agents provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.