Life insurance not only plays a big role in your personal life but can be a big part of your business, especially when creating a succession plan. Your partners and employees rely on you for their livelihood. What better way to ensure that their jobs don’t die with you in such an unfortunate event than with business life insurance.

Types of Policies

Buy/Sell Agreements
This type of life insurance policy is most often set into place when a business has multiple owners, partners, or shareowners.

What happens to a partners share in the unfortunate event that he passes away?

One of a few things can occur:

• Liquidation of the business
• Outside parties buy into the company
• Surviving family members have to become active within the business, regardless of skill level

Owning business life insurance can assist in continuing the business without interference. If a partner passes away under such agreement, the death benefit will then be used to assist in buying the remaining shares of the business.

Types of Agreements:

• Cross Purchase
• Entity/ Stock Redemption
• Wait and See/Hybrid

Key Employee Insurance
This type of life insurance policy is most often set into place in order to keep your business afloat if you or an integral member of the business dies. The business is the owner, payer, and beneficiary of this particular type of policy.

A key employee is defined as the following:

• A person having specialized skills that are critical to the success of the business
• A person having a significant cliental base that might leave the business if such person passes away.

You do not want your business to suffer any disruption of sales, creditor confidence or customer relations in such an unfortunate event of the death of a key person.

A business life insurance policy can then assist in the following ways:

• Cover expenses for recruiting, training and replacing a successor
• Cover the liquidity needed to replace lost revenue
• Assist in paying debts, severance or unexpected expenses

Make sure you have a succession plan in place for the unforeseen events in life and call us today!