Key person insurance is a life or disability insurance policy for a key employee or business owner whose absence would significantly impact the business. This insurance provides financial support to cover expenses such as recruiting and training a replacement, offsetting lost revenue, or even repaying business loans.

If your business relies heavily on specific individuals—such as founders, executives, or highly skilled employees—key man insurance is essential to protect against the financial disruption their loss could cause.

A succession plan focuses on preparing for the long-term transfer of ownership and leadership, typically in planned scenarios like retirement or selling the business. It identifies successors, outlines ownership transitions, and ensures the business’s legacy is preserved.

A continuity plan, on the other hand, is designed to address short-term disruptions caused by unexpected events, such as the sudden death or incapacitation of a key leader. It ensures the business can operate seamlessly during crises by defining interim leadership and operational procedures.

Both plans are vital but serve distinct purposes: succession plans secure the long-term future, while continuity plans protect against immediate risks.

Captive insurance is a self-insurance arrangement where a business forms its own insurance company to cover specific risks. Benefits include:

• Cost Savings: Reduces reliance on commercial insurers, often lowering premiums over time.
• Greater Control: Allows businesses to customize coverage to fit unique risks.
• Tax Advantages: Premiums paid into the captive may be tax-deductible, and the captive’s profits can grow tax-deferred.
• Improved Risk Management: Encourages proactive risk identification and mitigation.

Captive insurance is particularly beneficial for businesses with substantial risks and consistent insurance needs, offering both flexibility and financial advantages.

Asset protection strategies can reduce taxes and liabilities by leveraging tools and structures that safeguard wealth while offering tax benefits. Examples include:

• Business Structuring: Forming LLCs or corporations to separate personal and business assets, limiting liability exposure.
• Insurance Policies: Using liability, key man, and umbrella insurance to cover risks without directly impacting business finances.
• Captive Insurance: Offering tax-deductible premiums and deferred profits while managing risks.
• Retirement Accounts: Maximizing contributions to tax-advantaged accounts that are often protected from creditors.

By reducing exposure to risks and ensuring compliance with tax laws, these strategies preserve assets and improve overall financial efficiency.