For Gulf Coast business owners
Your business is not a
retirement plan.
It is an asset, and a good one. But an asset you cannot sell on your own timeline, cannot divide among your children, and cannot borrow against in a bad year is not the same thing as a plan. Most owners find that out too late to do anything about it.
No cost · No obligation · Straight answers
Where it fits
Four jobs an indexed universal life policy can do
inside a closely held business
Indexed universal life, or IUL, is a permanent life insurance policy with a cash value component. For business owners, it is useful in four specific situations. If none of these describe you, it is probably not the right tool, and we will say so.
Continuity
Funding a buy-sell agreement
An unfunded buy-sell agreement is a promise with no money behind it. When a partner dies or leaves, the surviving owners must come up with the purchase price from cash flow, a bank, or a fire sale of the business itself.
Life insurance is how that obligation gets funded in advance, so the agreement you signed can actually be carried out.
Protection
Covering a key person
If one person's departure would materially damage revenue, that exposure is real whether or not it appears on a balance sheet. Key person coverage pays the business, not the family, giving you the runway to recruit, retrain, and steady the accounts.
Lenders and prospective buyers frequently ask whether it is in place.
Retention
Holding on to the people who matter
Qualified retirement plans have to be offered broadly. Selective arrangements, including executive bonus plans, let you provide a meaningful benefit to specific individuals without extending it to everyone on payroll.
Structured well, it gives a valued employee a concrete reason to stay through the transition.
The owner
Building something outside the business
This is the one owners most often skip. Qualified plans cap what you can contribute and impose required distributions later. A properly structured policy has neither constraint, and the cash value is a separate asset from the company.
Its purpose is that on the day you stop working, not everything you own depends on one buyer showing up.
The mechanism
How the cash value is credited
Your money is not invested in the market. The insurance company credits interest based on the movement of a market index, within limits set by your policy. There are two of them, and understanding both is the whole thing.
When the index falls
The floor stops the loss. A down year credits no interest rather than a negative return. Policy charges still apply, so the cash value can still decline.
When the index rises modestly
Below the cap, the gain is credited according to your policy's crediting method. This is where the arrangement does what owners expect it to do.
When the index rises sharply
The cap limits the credit. In a strong year you receive less than the index returned. This is the cost of the floor, and any honest description has to say so.
Illustrative only. Caps, floors, participation rates, and crediting methods vary by carrier and product, may be changed by the insurer within contractual limits, and are not shown here because your policy's terms are the only ones that matter. Index performance does not include dividends. This is not a projection of results.
Straight answers
What it does, and what it does not do
Indexed universal life is sold aggressively, and a good deal of what gets said about it is exaggerated. Here is the version we would want if we were sitting on your side of the table.
What it can do
- Pay a death benefit that is generally received income tax free by the beneficiary
- Accumulate cash value on a tax-deferred basis
- Provide access to cash value through policy loans and withdrawals, which can be income tax free when the policy is properly structured and remains in force
- Fund a buy-sell obligation with certainty rather than hope
- Accept contributions without the annual limits that apply to qualified plans
- Avoid required minimum distributions during your lifetime
- Sit outside the business as an asset your family controls
What it does not do
- It does not invest your money in the stock market, and you do not receive dividends
- It does not deliver market returns in strong years, because the cap limits the credit
- It is not free. Cost of insurance, administrative charges, and rider fees are deducted, and the cost of insurance rises as you age
- It does not tolerate underfunding. A policy that is not funded as designed can lapse, and a lapse with an outstanding loan can create a taxable event
- It is not a substitute for a qualified retirement plan, and it is not a bank account
- It is not liquid in the early years. Surrender charges apply
- It is not available to everyone. Coverage requires medical and financial underwriting
Before you book
Is this worth a conversation?
Probably yes if
- You own all or part of a profitable business
- You are already maximizing your qualified plan contributions
- You have a partner and no funded buy-sell agreement
- A family member is expected to take over
- You can commit to funding a policy consistently for many years
- Most of your net worth sits inside the company
Probably not if
- Cash flow is unpredictable enough that premiums would be at risk
- You have not yet funded an emergency reserve
- You carry high-interest debt that should be cleared first
- You have not used the qualified plan capacity available to you
- You are looking for a short-term or liquid place to hold money
- You want market returns and are willing to accept market losses
How we work
Four conversations, not a sales appointment
Understand the business
Ownership structure, partners, key people, existing agreements, and what you intend to happen when you stop.
Find the exposure
Where a death, a departure, or a stalled sale would do real damage. Often the answer is not where the owner expected.
Design and illustrate
If insurance is the right tool, you see the numbers in writing, including costs and what happens if funding stops.
Coordinate and review
We work with your CPA and attorney so the agreement, the entity, and the policy actually agree with each other.
Questions owners ask
Before the first meeting
Is the premium deductible to my business?
Generally not, when the business is a beneficiary of the policy. Some arrangements, such as an executive bonus plan, may be deductible to the business while being taxable to the employee. The answer depends on your entity type and how the arrangement is structured, and it is a question for your CPA. We coordinate with them rather than guess.
What happens if I cannot pay the premium one year?
It depends on how the policy was funded and how much cash value has accumulated. A policy with sufficient value may absorb the charges for a period. A policy that has been minimally funded may lapse, and a lapse with an outstanding loan balance can trigger income tax. This is why we design around what you can sustain in a difficult year, not a good one.
How is this different from what my group plan offers?
Group coverage generally ends when employment does, is limited in amount, and is not owned by you. It is worth having and it is not a substitute for a personally owned permanent policy, especially where a buy-sell obligation or a key person exposure needs to be covered regardless of employment status.
Do I need to be in perfect health?
No, but coverage requires medical and financial underwriting, and your health affects both eligibility and cost. Many owners qualify at better rates than they expect. Some do not qualify at all, and there are other structures available in that case.
How do you get paid?
When a policy is placed, the insurance carrier pays a commission. Ask us directly and we will tell you what it is. If insurance is not the right answer for your situation, we will tell you that too, and there is no charge for reaching that conclusion.
Next step
Start with a conversation about the business
Not a product presentation. We will look at how the company is owned, what happens if something goes wrong, and whether an insurance-based strategy actually solves it. If it does not, that is a useful answer too.
- No cost, and no obligation to proceed
- You leave with a written summary of what we found
- We coordinate directly with your CPA and attorney
- Nothing is illustrated until we understand the structure
We reply within one business day. Your information is used to prepare for the conversation and for nothing else. We do not sell or share it.
Rather not wait for a reply? Pick a time on the calendar