We often hear about life insurance as a personal insurance policy, but what about for business owners? A business owner must consider the implications if an owner passes away unexpectedly. Is there a plan to recover from that loss? Where will the funds come from to continue operations or find a new executive with the right skills? Maybe perpetuation to a colleague or family member is preferred.
This type of planning is exactly what a buy-sell agreement addresses: think of it as a "will" for the business. This agreement spells out exactly what will happen upon the untimely death of the owner(s) and what will happen with their shares of ownership.
Key life insurance can be purchased by the company on the lives of its owners. It supports the provisions set forth in the buy-sell agreement. The business purchases these insurance policies on the owners for their share of assets of the company so that the company can continue and the families of the deceased can be provided for. Buy-sell agreements and key man life insurance can provide the procedure and needed funds to keep your company going and ease the transition after an untimely loss of key personnel without a lot of legal and financial hassles.