Sell Life Insurance to Businesses and Get Impressive Results

Many agents think it’s complicated to sell life insurance policies to businesses.

The truth is that it doesn’t have to be – if you’re approaching them with the right ideas.

It’s important that you make business owners see the value in what you’re offering – for them and for their employees.

Here are some life insurance concepts you can offer to businesses that they probably don’t even know they need.

Selling Life Insurance to Businesses

1. Key Person life insurance

Every business has one or more key people who run the show, whether it’s a key chef, engineer or any other industry you can think of.

This person may not even be the “boss,” but they’re the individual who is key to driving the business forward, they know where everything is, or they generally have a handle on the day-to-day inner-workings of the business.

This is the person for whom Key Person life insurance is designed.

The company purchases a life insurance policy on that person, pays the premiums and is the beneficiary.

In the event that the key person dies, the company receives the insurance proceeds, and can use the money for whatever is needed to find and train a replacement.

Everyone knows a business owner and – as the insurance producer – it’s easy for you to approach a company with the question, “Do you employ any key people where, if something were to happen to them, it would negatively impact your business?”

Try it and see what kind of sales flow in from selling life insurance to a business.

2. Funding Buy-Sell Agreements

A Buy-Sell Agreement is a necessity for two or more people who own a business together.

It’s a legal contract that lays out what will happen to the business if one of the co-owners dies or leaves for some reason.

It usually involves one partner buying out the shares of the other partner, or the partner’s spouse or family.

Many businesses have such an arrangement, but they haven’t figured out how to fund it, which is where life insurance comes in.

Buy-Sell Agreements can be funded with life insurance policies.

Even if a business thinks they’re covered, they often forget about reviewing and updating that policy. For example, if the value of the business has changed, the amount of life insurance should be updated.

You’ll find that business owners are receptive to these propositions because they see the value.

3. Executive bonus arrangements

When an employee is doing a stellar job, it’s common to reward them in some way.

It could be in the form of a bonus, but what about recognizing their efforts in the form of a life insurance policy?

In a situation such as this, the business owner pays the premiums for the employee.

This can take a few different forms.

Single bonus

The bonus is equal to the premium on the policy. The executive is responsible for the income tax on the bonus.

Gross-up bonus

The bonus is equal to both the premium on the policy and the executive’s tax on the bonus. This is also called a “double-bonus.”

Special schedule bonus

This bonus is fine-tuned by the business. It’s frequently used with rising young executives with bright futures. It will typically start with a single bonus and later phases up to a gross-up bonus.

There are several reasons that executive bonus arrangements are advantageous to, not only the employee, but the business, as well.

• As long as it represents “reasonable” compensation, an employer can deduct the bonus paid to the executive.

• The plan helps create a nurturing employment environment for executives, thus considerably reducing the employer’s replacement and retraining costs.

• The employer is mostly free to select which employees will be covered and what rights and benefits will be provided.

• The plan doesn’t require any formal qualification or approval by official entities (like the IRS or ERISA compliance). And the business doesn’t need to provide periodic reports or actuarial plan evaluations to state or federal regulatory agencies.

Take advantage of opportunities to sell life insurance to businesses

It’s not as hard as you think to sell life insurance to a business  –  when you know how to approach them with the right information.

Show them the value of having insurance for the key person or people in their company and explain how life insurance can be used to fund Buy-Sell Agreements.

They may not have ever thought of using life insurance as a bonus for their employees, so be sure to thoroughly explain this option to your prospects, as well.

Have you approached any of your business prospects with these ideas?