Insurance Saves a Family Business
Most family business’ fail to make the inter-generational transition because of taxes, working capital and disruption of a key person no longer working in the business.
Life insurance can provide the capital to successfully transfer the family business to the next generation.
Ernest “Peanut” Folks took great pride in the fact that his son, Ernesto, chose to follow in his footsteps. Peanut owned P&A Collision, an auto body repair shop, and his plan was to one day pass along the business to his son. Life insurance never factored into Peanut’s plan until an insurance professional called on him. Peanut became convinced he should protect the business and its 10 employees.Downturns in the business sometimes would make it hard for Peanut to make the monthly premium payment. He occasionally considered dropping the policy. Fortunately, his insurance professional, Jon Shoemaker, CLU, ChFC, LUTCF, understood how much he needed the coverage. When a payment was late, Jon would drive out to Peanut’s shop to pick up the check.
On one visit, Jon noticed Peanut didn’t look well and had lost weight. Soon afterward, Peanut got the worst possible news: He had an advanced stage of lung cancer. Doctors gave him just six months to live. The treatments that followed kept him away from work, and medical costs mounted.
Fortunately, Jon knew a way to ease Peanut’s burdens. A provision in his policy called an accelerated death benefit allowed him to access a portion of the death benefit while he was still alive, given his terminal diagnosis. In the months before his death at age 49, Peanut was able to pay off his debts and turn the body shop over to Ernesto. “The early payment allowed him to transition the business without having to borrow money or pass the hat,” says Jon. “It allowed him to go out with dignity.”
The next step to protect your loved ones and business
Life Insurance is different, you can’t just buy it. You have to apply and be offered a policy based on your health and other Underwriting conditions. That is why it is important to start today because you never know what is going to happen tomorrow.
Learn more about the Application process at the Application Center