Term life insurance offers financial protection over a specific period before expiring. Business owners should have both business and personal life insurance to protect their company and family family. Get a quick and hassle-free estimate with our Policygenius calculator.
business life insurance 101
Term life insurance guarantees financial protection over a specific period—the term—before expiring. Business owners should have both business, either key person life insurance or through a buy-sell agreement, and personal life insurance to protect their company and family family.
Key person life insurance
Key person insurance is essential to securing your business’ future. It protects your business from the loss of an owner, partner, CEO, or other major executive. As financial professionals, we want to make sure that your business is shielded from risk.
What does it cover?
In a worst-case scenario, business responsibilities don’t just disappear. Key person insurance can cover the impact of a loss, including outstanding business loans, related loss in revenue, and costs of hiring new talent.
Who is it for?
Any business with employees who are crucial to success and whose expertise would be difficult to replace should consider protecting those employees. Companies from start-ups to corporations protect employees like CEOs, CFOs, owners, and partners.
Buy-sell agreements
Buy-sell agreements are must-haves if you jointly own a business. A buy-sell agreement dictates what happens to each owner’s share of the company if they leave the business and sets the price and terms for the remaining partners to buy the deceased (or exiting) partner’s shares. Adding life insurance to a buy-sell agreement simplifies the process by earmarking money for a buyout.
Cross-purchase agreement
In a cross-purchase agreement, each partner purchases life insurance on the others. If one owner dies, the others use the death benefit to buy the deceased’s company shares.
Entity purchase plan
With an entity purchase plan, the business buys a life insurance policy on each owner, and uses the death benefit to purchase their shares if one dies.
Interested in learning more? Contact us directly at (630) 441-1003!
