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Cash Value Life Insurance: A Business Owner's Financial Safety Net

Updated: Oct 26

Business owner - Bakery

As a business owner or manager, you understand the importance of having liquid capital to support growth. However, finding or borrowing money for your business can be stressful and challenging. But what if there was a way to use your existing assets to manage your balance sheet effectively? Enter cash value life insurance.

Cash value life insurance is a type of permanent life insurance with a cash value component. When you pay your premiums, a portion of the money goes towards the cost of insuring your life, and the insurance company invests the rest. The investments are typically made in a mix of stocks, bonds, and other assets.

But why would you want to use cash-value life insurance as a financial tool for your business? Here's a story to illustrate its benefits.

Meet Carmen, a small business owner who runs a bakery. She has been in business for a few years and is doing well, but she wants to expand her bakery and open a second location. However, she needs more capital to do so, and the thought of taking out a bank loan stresses her out.

Then Carmen learns about cash value life insurance. She has a policy with a significant cash-value component, and she can borrow against it. So, she takes out a loan from her policy, uses the funds to open a second bakery location, and pays back the loan over time.

Using cash value life insurance to manage her balance sheet allowed Carmen to expand her business without taking out a loan or draining her savings account. And because she borrowed from her policy, she didn't have to worry about going through a credit check or dealing with high-interest rates.

Now, let's dive deeper into the benefits of using cash-value life insurance as a financial tool for your business:

  1. Access to liquid capital: With cash value life insurance, you have access to liquid capital that you can use for any business purpose. You can borrow against your policy and repay the loan on your terms.

  2. Tax advantages: The cash value component of your life insurance policy grows tax-deferred, meaning you don't have to pay taxes on the gains until you withdraw them. And when you borrow from your policy, the loan is tax-free.

  3. No credit check or high-interest rates: Unlike traditional loans, you don't have to go through a credit check or deal with high-interest rates when you borrow from your cash-value life insurance policy.

  4. Protects your family and business: As a business owner, you're likely the primary breadwinner for your family. Cash-value life insurance provides a death benefit to your beneficiaries and a cash-value component that you can use during your lifetime for unexpected cash needs or investing in your business's growth.

Remember, managing your balance sheet is essential for the success and growth of your business. Don't let the stress of finding or borrowing money hold you back. Consider using your existing assets, like cash value life insurance, to achieve your business goals. Remember, using cash-value life insurance as a financial tool for your business can provide you with access to liquid capital and tax advantages and protect your family and your business. If you're interested in exploring this option, talk to us to see if it's right for you.

So, what are you waiting for? Take the first step towards financial freedom and explore cash-value life insurance for your business today.

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