Business Owner Planning

What Happens to the Business if You’re Gone?

If you own a business, a lot of your family’s future may be tied up in it. Life insurance can answer some specific questions about what happens to the business if an owner or a key employee dies. This isn’t the biggest part of my practice, but I’m glad to educate you on how it works.

Key Person Insurance

The business owns a policy on someone it would struggle to replace, and it receives the benefit if that person dies. The money can help cover lost revenue or the cost of finding and training a replacement. The employee has to be told in writing and consent before the policy is issued, or much of the benefit can become taxable.

Buy‑Sell Funding

A buy‑sell agreement says what happens to an owner’s share when that owner dies. The agreement itself is your attorney’s work. Life insurance can provide the money, so the remaining owners can buy the share and the family gets paid.

Executive Bonus Plans

The business pays the premium on a life insurance policy owned by a key employee, as a bonus. The business can generally deduct it as compensation, the employee generally pays income tax on it, and the employee owns the policy. It’s a relatively simple way to reward someone you want to keep.

Who Else Needs to Be Involved

Each of these has legal and tax consequences that depend on how your business is set up. Your attorney and CPA should review anything before you act on it, and I’m happy to work with them.

This page is general information, not legal or tax advice. Coverage is subject to underwriting. Guarantees depend on the financial strength and claims‑paying ability of the issuing insurance company.