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Just How Much Is That CEO Worth to Company?

February 28, 2008 By:
Craig G. Langweiler, JE Feature
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Opening and operating a business are acts of hope, expressions of confidence in the future. So it follows that a small business is not a place where people spend much time thinking about death or disability.

Sometimes, the demands of business are so great that it may seem as though nothing else matters, which may explain why only 17 percent of small companies own key-man life insurance on their chief executives.

How many companies would be able to continue without interruption or losses if a leader or key player suddenly died or became unable to work? Would yours?

A business can buy key-man life insurance to help offset the financial consequences resulting from the death of someone upon whom the company relies for success. If the insured dies, the policy pays a death benefit that can help the company bridge any financial gaps created by the loss while the survivors decide how to proceed.

Believe it or not, people between the ages of 35 and 64 are six times more likely to become disabled than to die. For this reason, it's also important to consider whether the business could benefit from key-man disability insurance.

The cost and availability of life insurance depends on factors such as age, health, and the type and amount of insurance purchased. Of course, before implementing a strategy, it would be prudent to make sure that you are insurable.

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The global economy appears poised to undergo a tremendous shift, if it has not already begun.

For years, vast segments of the global economy have hinged on the United States, home to the world's largest national economy. A strong dollar, consistent economic growth and rising home values have allowed U.S. consumers and businesses to spend more freely than the rest of the world.

But this could all change with a slower U.S. economy, a weaker dollar and wealthier trading partners.

The U.S. trade deficit is perhaps the most tangible proof of the U.S. consumer's tendency to outspend his overseas counterpart. A housing slowdown, tighter credit conditions and a weaker dollar have dampened the U.S. consumer demand for imports, which late in 2007 fell to its lowest point since the 1991-92 recession.

The good news is that consumer demand has grown significantly in countries like Brazil, South Africa and India, which could help offset some declining U.S. demand.

Some economists point to these developments as a signal that the balance of trade may be shifting as U.S. consumers spend less while consumers in other nations spend more. The U.S. role in the world economy is changing, but, then again, it has always been changing.

Craig G. Langweiler is president of Langweiler Financial Group, located in Newtown. He can be reached at: 215-860-8088 or at: clangweiler@saxonysecurities. com.

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