Buy/Sell Succession Strategy 

A buy/sell succession plan defines how you and a partner will distribute interests in your jointly held business when one of you dies. Using life insurance to fund this plan provides cash to enable the surviving owner to buy out the deceased partner’s interest from his heirs. Life insurance policies are purchased on each owner and can be paid for by the business. A buy-sell agreement funded with life insurance can help prevent difficult situations in which a partner finds himself in business with a surviving heir who knows little about the business or in which the business must be sold in order to settle the deceased partner’s estate.

 Equalizing Your Estate 

When your business represents a large portion of your estate, it can be challenging to ensure a fair inheritance to heirs who are not active in the business. The liquidity created by the life insurance proceeds provides a legacy for those not involved or interested in your family business and avoids the forced liquidation of the business in order to fairly divide your assets.  

Key Person Protection

 Life insurance can help your business survive the death of a key employee by providing the funds needed to replace lost revenue while hiring and training a replacement. The business purchases life insurance policies for each key individual, pays the premium and receives the death benefit. Key employees could include any employee whose death would create a disruption through the loss of their unique skills or experience. 

Business Loan Collateralization 

Taking on business debt secured with your personal assets could put both your family and the business at risk in the event of your untimely death. By purchasing a life insurance policy to be used as loan collateral, you can guarantee the debt repayment and avoid any risk to your personal assets.