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FAMILY businesses face the risk of being dissolved because of disputes over inheritances following the passing of the founder. This is especially true when not all family members are actively involved in the business.
To ensure an equitable sharing of assets, the business can purchase a universal life insurance (ULI) policy for the owner that will effectively increase the value of the assets that can be distributed among his heirs. More importantly, it provides cash to pay the heirs that are not active in the company their share of the wealth immediately, thus avoiding the need to liquidate an otherwise healthy business.
ULI can also be used as a form of bonus to help retain top talent or as a way to diversify an investment portfolio as returns from insurance tend to have a low co-relation to other asset classes.