Protecting Your Business

If you have poured your blood, sweat and tears into building a successful business, you likely want the business to carry on following your death, without impacting your family. Without life insurance coverage, your heirs may face a challenge with continuing the business and paying the associated expenses. Faced with this overwhelming endeavor, they may be forced to sell the business. Consider protecting your business and your family with a life insurance policy.

Safeguard your business, get a life insurance quote!

Buy/Sell Agreement

In the buy/sell arrangement, you will enter into a contract with your business partner(s), so that when you die, the business will be transferred as outlined in the agreement. The contract specifies that, when you die, the owner must purchase your business interest and your surviving heirs must sell it. This allows your business to carry on smoothly, without putting the burden on your family, plus your heirs receive the proceeds from the business sale. There are three types of buy/sell arrangements:

• Cross purchase plan – each owner applies for, owns and pays life insurance premiums on the other owners
• Entity plan – the business applies for, owns and pays the life insurance premiums on each owner
• Stock redemption plan – the corporation applies for, owns and pays the life insurance premiums on each shareholder
• Wait and see plan – provides elements of cross purchase and entity plans

A buy/sell plan can be effective in ensuring the business will continue to operate smoothly after your death.

Keyperson Life Insurance

If your business is run by a small team or mainly by one person, the premature death of a key person would have a significant impact on business operations. A keyperson life insurance policy is specific to filling the void of the lost life of the key person in your business. The determination about the amount of the death benefit is generally one times the key person’s income, but other factors may increase the amount (for example, someone who would be difficult and costly to replace, outstanding business debts, etc.). The proceeds of a keyperson life insurance policy can be used to:

• cover business debt
• leave working capital for a surviving partner(s) to continue the business
• identify and hire a replacement for the key person
• provide cash for the business in the event of a revenue shortfall

Life-Insurance-Info.us is not a life insurance broker or carrier, and cannot issue life insurance policies. This site provides free information on insurance providers and coverage options. We are not associated with the companies profiled on Life-Insurance-Info.us and we make no representation, express or implied, that you will receive a quote from a specific company profiled herein. Products and policies may not be available in all states, and product and policy information is subject to change without notice. Please contact the insurance company directly to answer your policy inquiries.