BUSINESS LIFE INSURACNE

Businesses also have Life Insurance needs. Businesses can use Life Insurance to protect against the loss of an owner, key employees , or as an extra form of compensation for employees, particularly highly paid executives.

KEY EMPLOYEE LIFE INSURANCE

A business may purchase a Life Insurance policy to protect itself against the loss of a key employee. A Key Employee Life Insurance policy can provide monetary compensation to improve the business’ financial stability.

With Key Employee coverage, the business owns the policy and is also the beneficiary. The business pays all the premiums and receives the entire death benefit if the Insured dies. The Insured plays no role in the policy, except to sign the application giving the business permission to purchase the policy.

BUY-SELL AGREEMENTS

The death of an owner may make it difficult for the remaining owners to continue the business. The business may need to replace the workload of the deceased owner, or the remaining owners may not want to continue the business with the heirs of the deceased owner.

Many businesses establish a Business Continuation Plan which is an agreement stating that the business (or the surviving owner) has the right to buy the deceased owner’s share of the company at an agreed upon price. Most Business Continuation Plans are funded by purchasing Life Insurance on the lives of each of the owners.

EMPLOYEE COMPENSATION

Businesses can purchase Life Insurance as a fringe benefit for employees. Using Life Insurance as part of an employee compensation package can serve the needs of both the business and the employee

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