Small Business and Self-Employed Business Owners Help Center

A 10 Step Guide to Successful Small Business Management

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Table of Contents

Ten Building Blocks
to Success:
 1. Starting a Business
 2. Financing a business
 3. Company Name
 4. Office Equipment
 5. Hiring
 6. Business Insurance
 7. Advertising
 8. Efficiency
 9. Pension Plans
 10. Succession Plans

 Checklist for Success

 More Useful Advice:

▪Life Insurance

▪Disability Insurance

▪Medical Insurance

▪Long Term Care

▪Travel Insurance

▪Dental Insurance

▪Auto Insurance

        Resources

 Helpful Links Page 1

 Helpful Links Page 2

 Helpful Links Page 3

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 Gifts For Clients

Whole Life

    A traditional whole life policy has a fixed premium and cash value that accumulates tax deferred at a low interest rate, such as 4%. The whole Life policy has two components:

    (a) Death Protection. This is the same at Term Life Insurance

    (b) Cash Value Build-up.

    The premium is higher than term life insurance, usually 5 times higher, since the premium includes money that goes into the Cash Value.
    The advantage of having a cash value build-up is it's a form of savings, at a low but guaranteed rate, and the interest accrues tax deferred. You are taxed on that interest only when it is withdrawn from the policy.
    The disadvantage of having the cash value build-up is the surrender charges. These charges are high in the early years, usually equal to 100% of the cash value. The surrender charge decreases over time but take normally 20 years before there are no more surrender charges.

    The main drawback to a Whole Life Policy is the internal fees, sometimes called the "load." The Load is subtracted from the premium first, then the mortality charge (about equal to the term life premium), and finally what is left is put into the Cash Value pot. As a return on investment, the yield is MUCH LOWER than the fixed interest rate.

    There's a saying in the Life Insurance business: "Buy term and Invest the Difference." We firmly endorse that saying. If you take the difference between the whole life and the term life premiums and invest in a pension plan, bank account, etc. your return on investment will be higher and you will always have access to 100% of your money without surrender charges.

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