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Business Owner -  Young Business


Young business, only 2 years old, is profitable and has general game plan for growth.

Owner is concerned regarding future on several fronts. He took retirement funds from previous employer plan to start business, he wants to start funding how own retirement plan and needs to know how best to accomplish this. Additionally, he feels his life and disability insurance are inadequate for his current and future needs.


Leave no stone unturned, look at all options regarding protection (life and disability) from  stay with existing items in place, add to current, replace current or have new concept installed. Regarding retirement plans, look at all options with understanding business is to grow and with that retirement programs may change to meet needs of owner and effectively cover employees.


Review existing insurance policies {life and disability) for coverage, cost and length. Take a census of organization and factor owner desires to  fund as much as possible into cost effective retirement plan.



Owner had existing whole with term rider policy ($100K) and annually renewable term ($SOOK). Existing term policy has premium increasing annually, up 150% by the end of the term.

Exchange existing whole/term rider policy for new indexed universal life policy increasing coverage from $100K to $2SOK. Premiums up 200%, coverage up 150%, cash accumulation potential  tripled.

Utilize indexed universal life policy as cash accumulation and future parking of sale of business proceeds. Indexed feature provides up or over investment returns.

Purchase new 15 year flat rate term policy at same amount ($SOOK). Current year savings 68%, 10 th year savings 85%


Existing policy provided 40% of need.

Evaluated additional policy making up the additional need or new policy for 100% of need. Additional policy was recommended,  savings of 11% compared to complete replacement.


Demographics of employee census showed 6 full time employees (incl. owner). Of the 6, only owner and 1 other had more than 12 months of service.

First year, install a SEP at 25% contribution rate, owner and one employee are eligible with 77% of company SEP contributions for benefit of owner.

Second year options: Safe harbor 401(k) with 4% match (80%), prior with Profit sharing added

(67%), integrated profit sharing (56%) or 412 defined benefit plan (77%).  First year cost goes from least to most as listed.  First 3 plans covers 4 total employees, last covers only 2.


Protection: new life policies (permanent and term), additional disability policy.

Phased in retirement programs. First year, SEP installed since 77% of contributions went to owner. Year 2, safe harbor 401(k). Third year, profit sharing added to 401(k) as revenue stream gains momentum while doubling contributions to owner.

This is a hypothetical example and is not representative of any specific situation. Your results will vary.

Investors should carefully consider the charges and fees associated with a new insurance  policy  as well as any cost that may be associated with surrendering the current policy.
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