4 Ways Whole Life Insurance Can Help with Business Expenses

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4 Ways Whole Life Insurance Can Help with Business Expenses

Owning a small business is a dream for millions of Americans. Starting a business is exciting. It is also a huge commitment that comes with a unique set of challenges, including planning for the unknown.  Did you know that whole life insurance can be a pivotal part of this strategy?

Traditional whole life insurance is commonly known for the important core value of protection coverage it can provide for a policyowner’s family. It can also play a role in helping to protect the owner’s business too. While there are benefits that come along with being a small business owner, the flip side is that you potentially might not have access to certain retirement plans, an employer-sponsored life insurance and even sick pay, like you would if working for a large employer. Whole life insurance may be able to solve for these and some other challenges that business owners face.

One key difference between a whole life insurance policy and some other types of insurance, like term life, is its guaranteed cash value component.1 As premium payments are made into a policy, the cash value will grow2, tax deferred.3 One advantage of the cash value is that a policyowner can make a withdrawal in the event of an emergency or any other unknown issue that a small business owner may face.4

Here are some examples of expenses that may be covered by applying a cash value withdrawal.

  • Rent: In an average year, rent can be a big expenditure for many small business owners. Access to cash value may help offset or cover rent if your business needs to close for illness or any other reason for a brief time.
  • Sick time: When you’re feeling under the weather, there are days when you just can’t or shouldn’t push through it and you’ll need to take an unpaid day off.  Access to cash value can help cover bills and expenses, especially if one sick day turns into many days off.
  • Disaster Preparedness: Natural disasters cause billions in damages and lost business revenue each year. While business insurance often covers many costs associated with disasters, there can often be gaps. Cash value from a whole life policy may help offset some lost revenue, or to cover repairs.
  • Cash Flow: Cash is the lifeblood of your business. Yet, cash flow slowdowns are inevitable in any business, so there may be times when you’ll need extra cash to tide you over. Having access to funds can help if bills need to be paid during one of these times.

Another bonus of the cash value is its accessibility. The cash value from a whole life policy can be readily available and may not face any penalties when accessed. A whole life policy can be a part of your business’ strategy for preparedness and growth, as well as protecting you and your family.

Discuss your preparedness strategy today with your financial professional.


Brought to you by The Guardian Network © 2020. The Guardian Life Insurance Company of America®, New York, NY

2020-101663 Exp. 6/22


1 All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.

2 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.

3 Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

4 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

Published:  February 25, 2022